Complete this matrix by providing at least 2 reasons why you agree and 2 reasons why you disagree with each of the following authorâ€™s statements (shown on page 17 of the article).
Support your arguments with at least 125 words for each agreement/disagreement.
â€œIn the future, I envision more companies moving toward actual cost systems.Standard cost variance analysis will no longer be required because inventory transactions will be recorded at actual cost.â€
â€œThis change will free up significant resources in the finance department and will allow cost analysts to function more as business partners within the organization.â€
Identify the budgets in Column B from which dollar amounts are transferred directly in constructing
the budgets listed in Column A.
The following information is from the manufacturing budget and the budgeted financial statements
of Fabor Fabrication:
Compute the budgeted amounts for:
a. Purchases of direct materials during the year.
b. Cash payments during the year to suppliers of materials.
Sales on account for the first two months of the current year are budgeted as follows:
All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days);
collections on accounts receivable are typically made as follows:
Compute the estimated cash collections on accounts receivable for the month of February.
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget
for March, April, and May. All of the companyâ€™s sales are made on account. The following information
has been provided by Spicerâ€™s management:
The standard costs and variances for direct materials, direct labor, and factory overhead for the
month of May are as follows:
Gumchara Corporation reported the following information with respect to the materials required to manufacture amalgam florostats during the current month:
a. Determine Gumcharaâ€™s materials price variance.
b. Determine Gumcharaâ€™s materials quantity variance.
c. Will Gumcharaâ€™s overhead volume variance be favorable or unfavorable? Why?
Marlo Enterprises produces radon mitigation pumps. Information pertaining to the companyâ€™s
monthly direct labor usage is provided below:
a. Compute the companyâ€™s labor rate variance.
b. Compute the companyâ€™s labor efficiency variance.
c. An extremely large order of radon mitigation pumps was filled during the month for exportation
to Saudi Arabia. Filling this order resulted in extended hours for many of the companyâ€™s workers.
Which labor variance reflects the extra hours worked by Marloâ€™s employees? Was their time
well utilized? Explain.