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Chapter 23: Q4SE (page 1306)

Matching terms

Match each term to the correct definition.

Terms Definitions

a. Benchmarking

b. Efficiency variance

c. Cost variance

d. Standard

1. Measures whether the quantity of materials or laborused to make the actual number of outputs is within thestandard allowed for the number of outputs.

2. Uses standards based on best practice.

3. Measures how well the business keeps unit costs ofmaterials and labor inputs within standards.

4. A price, cost, or quantity that is expected under normalconditions.

Short Answer

Expert verified
Terms
Definitions

a

Benchmarking

Uses standards based on best practice.

b

Efficiency variance

Measures whether the quantity of materials or labor used to make the actual number of outputs is within the standard allowed for the number of outputs.

c

Cost variance

Measures how well the business keeps unit costs of materials and labor inputs within standards.

d

Standard

A price, cost, or quantity that is expected under normal conditions.

Step by step solution

01

Introduction to Benchmarking-

Benchmarking is a process of comparing the performance of an organisation to a predetermined goal or number how the organisation's productivity, efficiency, and competitiveness measures up to industry standards.

02

Introduction to Efficiency variance-

Efficiency variance is the distinction between the actual unit utilization and the expected amount. The expected amount is generally the standard quantity of direct labor, machine usage time,direct materials, and etc that is assigned to a product.

03

Introduction to Cost variance-

Cost variance is the distinction between the expense actually incurred and the budgeted amount of expense that ought have been incurred.

04

Introduction to Standard-

Standard costing is the estimated price of a product or service and act of substituting an expected expense for the actual expense of an operation or product.

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Most popular questions from this chapter

Question:List the direct materials variances, and briefly describe each.

Interpreting material and labor variances

Refer to your results from Short Exercises S23颅6 and S23颅7.

Requirements

1. For each variance, who in Martin鈥檚 organization is most likely responsible?

2. Interpret the direct materials and direct labor variances for Martin鈥檚 management.

Headset manufactures headphone cases. During September 2018, the company produced 106,000 cases and recorded the following cost data:

Standard Cost Information

Quantity

Cost

Direct Materials

2 parts

\( 0.16 per part

Direct Labor

0.02 hours

8.00 per hour

Variable Manufacturing Overhead

0.02 hours

11.00 per hour

Fixed Manufacturing Overhead (\)30,720 for static budget volume of 96,000 units and 1,920 hours, or \(16 per hour)

Actual Information

Direct Materials (209,000 parts @ \)0.21 per part) \( 43,890

Direct Labor(1,620 hours @ \)8.10 per hour) 13,122

Variable Manufacturing Overhead 9,000

Fixed Manufacturing Overhead 30,000

Requirements

1. Compute the cost and efficiency variances for direct materials and direct labor.

2.For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances.

3. Headset鈥檚 management used better颅quality materials during September. Discuss the trade颅off between the two direct material variances.

Preparing a standard cost income statement Review your results from Problem P23颅33B.

Middleton鈥檚 actual and standard sales price per mug is $5. Prepare the standard cost income statement for July 2018.

Murphy Company managers received the following incomplete performance report:

Units Actual Results Flexible Budget Variance Static Budget Flexible Budget Sales Volume Variance Sales Revenue Contribution Margin Fixed Expenses Operating Income 35,000 (a) (b) 5,000 F \( 29,000 \) 14,000 105,000 0 \( 219,000 \) 27,000 F 85,000 13,000 MURPHY COMPANY Flexible Budget Performance Report For the Year Ended July 31, 2018 134,000 14,000 35,000 \( 35,000 100,000 \) 219,000 84,000 135,000 (c) (d) (e) (f) (h) (g) (i) (j) (k) (l)

Complete the performance report. Identify the employee group that may deserve praise and the group that may be subject to criticism. Give your reasoning.
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