Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 15, Problem 7E
Exercise 8-4A Determining sales and variable cost volume variances
Required
Use the information provided in Exercise 8-1 A.
- a. Determine the sales and variable cost volume variances.
- b. Classify the variances as favorable (F) or unfavorable (U).
- c. Comment on the usefulness of the variances with respect to performance evaluation and identify the member of the management team most likely to be responsible for these variances.
- d. Determine the amount of fixed cost that will appear in the flexible budget.
- e. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity. Assuming Cherokee uses information in the
master budget to price the company’s product, comment on how the fixed cost volume variance could affect the company's profitability. Round computations to two decimal points.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Question 4
a.Illustrate and give examples of how variances operate in an organisation and why management must always endeavour to have them determined
b.Discuss the significance of both favourable and adverse variances how they assist management in reversing decisions.
In 2 way variance analysis, materials, labor and variable overhead variances maybe broken down to ________ variances.
A. Price and spending
B. Quantity and time
C. spending and efficiency
D. spending and capacity
Distinguish among a budget, a performance report, and a variance.
Question content area bottom
Part 1
A.
A budget measures the differences between a performance report and a variance; a performance report compares actual results with the budget; and a variance is a quantitative expression of a plan of action.
B.
A budget compares the performance report with variances; a performance report measures the differences between budget and actual; and a variance is a quantitative expression of a plan of action.
C.
A budget compares actual results with the performance report; a performance report is a quantitative expression of a plan of action; and a variance measures the differences between budget and actual.
D.
A budget is a quantitative expression of a plan of action; a performance report compares actual results with the budget; and a variance measures the differences between budget and actual.
Chapter 15 Solutions
Survey Of Accounting
Ch. 15 - 1. Pam Kelly says she has no faith in budgets. Her...Ch. 15 - 7. What is a responsibility center?Ch. 15 - Prob. 3QCh. 15 - Prob. 4QCh. 15 - Prob. 5QCh. 15 - 3. When are sales and cost variances favorable and...Ch. 15 - 4. Joan Mason, the marketing manager for a large...Ch. 15 - Prob. 8QCh. 15 - Prob. 9QCh. 15 - Prob. 10Q
Ch. 15 - Prob. 11QCh. 15 - 9. Minnie Divers, the manager of the marketing...Ch. 15 - 6. How do responsibility reports promote the...Ch. 15 - Prob. 14QCh. 15 - Prob. 15QCh. 15 - Prob. 16QCh. 15 - 12. How can a residual income approach to...Ch. 15 - Prob. 18QCh. 15 - Exercise 9-6A Evaluating a profit center Helen...Ch. 15 - Prob. 2ECh. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Exercise 8-3A Determining amount and type...Ch. 15 - Prob. 6ECh. 15 - Exercise 8-4A Determining sales and variable cost...Ch. 15 - Exercise 8-5A Determining flexible budget...Ch. 15 - Exercise 8-9A Responsibility for the fixed cost...Ch. 15 - Prob. 10ECh. 15 - Exercise 8-7A Evaluating a decision to increase...Ch. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - Exercise 9-9A Residual income Climax Corporation...Ch. 15 - Residual income Gletchen Cough Drops operates two...Ch. 15 - Prob. 16ECh. 15 - Prob. 17ECh. 15 - Prob. 18PCh. 15 - Prob. 19PCh. 15 - Prob. 20PCh. 15 - Prob. 21PCh. 15 - Problem 9-20A Return on investment Sorrento...Ch. 15 - Problem 9-21A Comparing return on investment and...Ch. 15 - Comparing return on investment and residual income...Ch. 15 - ATC 8-1 Business Applications Case Static versus...Ch. 15 - Prob. 2ATCCh. 15 - Prob. 3ATCCh. 15 - ATC 9-1 Business Applications Case Analyzing...Ch. 15 - Prob. 5ATC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A company using direct costing in its performance evaluation would normally include the following variance in its report, except a. Budget variance b.Efficiency variance c.Price variance d.Volume variancearrow_forwardA company using direct costing in its performance evaluation would normally include the following variance in its report , except a. Efficiency variance b. Volume variance c. Budget variance d. Price variancearrow_forwardRevise the data in your worksheet to reflect the results for the subsequent period as shown below: A 1 Chapter 9: Applying Excel 2 3 4 Data Revenue 5 Cost of ingredients 6 Wages and salaries 7 Utilities 8 Rent 9 10 11 Actual results: 12 Revenue 13 Cost of ingredients 14 Wages and salaries 15 Utilities 16 Rent 17 18 19 20 Actual activity Miscellaneous Miscellaneous Planning budget activity $ $ $ $ $ GA $ $ GA B 10,400 800 2,200 600 30,295 11,110 10,310 1,210 2,200 2,060 C + + 1,700 meals served 1,800 meals served $ $ $ $ D 16.50 q 6.25 q 0.20 q 0.80 q Earrow_forward
- A company using direct costing in its performance evaluation would normally include the following variance in its report, except Price variance Volume variance Efficiency variance Budget variancearrow_forwardQuestion 4: Define the following: Variable cost Direct cost Volume variance analysis Cost and managerial Accountingarrow_forwardQuestion 9.5 When analyzing the total variable overhead cost variance into both spending and efficiency variances, it is often assumed that direct labour hours is the sole cost driver. Submission Instructions: Explain if direct labour costs could ever be a better cost driver of variable overhead costs than direct labour hours. How would ABC system affect the overhead variances?arrow_forward
- The performance evaluation of a cost center is typically based on its a. sales volume variance. b. ROI. c. static budget variance. d. flexible budget variance.arrow_forwardThe principle of exceptions allows managers to focus on correcting variances between O a. competitor's costs and standard costs b. standard costs and actual costs O c. competitor's costs and actual costs d. variable costs and actual costsarrow_forward1. What is the activity variance for the revenue? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect) 2. What is the spending variance for the cost of ingredients? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effecarrow_forward
- Q.Should Michael Bentfield’s performance evaluation be based solely on price variances? Should the production manager’s evaluation be based solely on efficiency variances? Why is it important for Katharine Johnson to understand the causes of a variance before she evaluates performance?arrow_forward1) Explain how standard costs are established? How do managers evaluate performance using cost variance analysis? 2) How do you make a decision in case of special order? Explain. Use examples if required.arrow_forwardIdentify the statement related to controllable variance. Statement 1: General increase in the labor rate Statement 2: Increase in the rate of insurance premium Statement 3: Change in market prices of material Statement 4: Excess usage of material a. Statement 1 b. Statement 4 c. Statement 2 d. Statement 3arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
What is Risk Management? | Risk Management process; Author: Educationleaves;https://www.youtube.com/watch?v=IP-E75FGFkU;License: Standard youtube license