CH07 - Questions 7-1 What is the relationship between...

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Applied Calculus for the Managerial, Life, and Social Sciences
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Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
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Questions7-1 What is the relationship between management by exception and variance analysis?7-2 What are two possible sources of information a company might use to compute the budgeted amount in variance analysis?7-3 Distinguish between a favorable variance and an unfavorable variance.7-4 Budgets are formulated on a departmental level. Explain how variances can interact between departments.7-5 When the actual performance lies below the budgeted performance and the budget is formulated in a consistent way, the manager will be happy at the end of the period. Discuss.7-6 A negative efficiency variance on direct material doesn’t have to mean that the department performed inefficiently. Discuss.7-7 The sales volume variance can also be measured at selling price instead of contribution margin. Explain.7-8 How might a manager gain insight into the causes of a flexible-budget variance for direct materials?7-9 List three causes of a favorable direct materials price variance.7-10 Describe three reasons for an unfavorable direct manufacturing labor efficiency variance.7-11 How does variance analysis help in continuous improvement?7-12 Why might an analyst examining variances in the production area look beyond that business function for explanations of those variances?7-13 Variances at the output side of the organization refer to effectiveness and variances at the input side refer to efficiency. Discuss.7-14 When budgets deviate from actual results, you will have to adjust either the outcome or the plans. Discuss.7-15 In highly automated processes, variance analysis becomes less relevant. Discuss.Exercises7-16 Flexible budget. Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2014, it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed costs of $54,000. The budgeted selling price was $110 per tire. Actual results in August 2014 were 2,800 tires manufactured and sold at a selling price of $112 per tire. The actual total variable costs were $229,600, and the actual total fixed costs were $50,000.1. Prepare a performance report (akin to Exhibit 7-2, page 275) that uses a flexible budget and a static budget.2. Comment on the results in requirement 1.7-17 Flexible budget. Connor Company’s budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attache case are $40, $8,and $12, respectively. The president is pleased with the following performance report:
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Applied Calculus for the Managerial, Life, and Social Sciences
The document you are viewing contains questions related to this textbook.
Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified

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