When variances are used as an input to the performance evaluation system which

When variances are used as an input to the

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7.When variances are used as an input to the performance evaluation system, which of the following scenarios may be encountered? A.Purchasing managers may buy too much inventory to get a bulk purchase discount B.Purchasing managers may buy lower quality materials to generate a favorable price variance C.If standards are set at easily achievable levels, some people will only do enough to meet the target, but no more D.When labor efficiency is measured on a team or production cell basis, the free rider may take advantage E.All of the above 8.Barrington Bears has developed the following sales forecasts for the next few months. January 500, February 600, March 720, April 800 and May 770. BB has 80 bears on hand on Dec. 31. Normal ending inventory policy is to hold 20% of next month’s sales. Each bear needs .8 yards of fabric and two pounds of stuffing. Fabric is budgeted to cost $15 per yard and stuffing $4 per pound. Direct labor is paid $18 per hour. Each bear takes 40 minutes to hand-finish. Variable overheads total $21 per direct labor hour. Fixed overheads amount to $25,000 per month. Eighty yards of fabric and 100 pounds of stuffing were in stock at year-end. Ten percent and 25% of next month’s stuffing and fabric needs respectively are planned for raw materials ending inventory each month.
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Exercises (1) Budgeting (Chapters 6,12, and 13) 14.02.20203 Assume that in March there was a favorable variance from the production master budget. Which factors may not have contributed to this result? c) and d) only
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  • Fall '18
  • #, $4, $15, $18, $21

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