Question

Given the information below, answer the question. As a manager, you want to analyze only significant...

Given the information below, answer the question.
As a manager, you want to analyze only significant budget variances on a monthly basis. Your company recommends the criteria below to determine if the budget variances are significant.

(1) Revenues (sales) If both $variance exceeds ±$5,000 and %variance exceeds ±4%, the variance is significant.
(2) Fixed Expenses (F) If $variance exceeds ±$100, the variance is significant.
(3) Variable Expenses (V) If both $variance exceeds ±$500 and %variance exceeds ±2%, the variance is significant.
Period: Nov 1-30, 2019 Budget Actual $ Variance % Variance

Sig/Non-sig

Favorable /Unfavorable

Room Sales

$200,000

$196,000

Food Sales

$50,000

$65,000

Cost of Food Sold (V)

$15,000

$16,000

Labor (F)

$10,000

$9,700

Labor (V)

$15,000

$15,200

Supplies (V)

$2,500

$2,700

Franchise Fees (V)

$4,000

$4,480

Depreciation (F)

$6,000

$6,000

Insurance (F)

$3,000

$2,050

Property taxes (F)

$3,000

$3,000

Which account shows significant and unfavorable variance during this period?

A. Cost of Food Sold

B. Labor (Variable expense)

C. Food Sales

D. Labor (Fixed expense)

Homework Answers

Answer #1
Particulars Budget Actual $ Variance % Variance Sig / Non Sig Fav / Unfav
Room Sales 200,000 196,000 -4,000 -2% Non Sig Unfavorable
Food Sales 50,000 65,000 +15,000 30% Sig Favorable
Cost of Food Sold 15,000 16,000 1,000 6.67% Sig Unfavorable
Labor (F) 10,000 9,700 -300 -3% Sig Favorable
Labor (V) 15,000 15,200 200 1.33% Non Sig Unfavorable
Supplies 2,500 2,700 200 8% Non Sig Unfavorable
Franchise Fee 4,000 4,480 480 12% Non Sig Unfavorable
Depreciation 6,000 6,000 0 0% - -
Insurance 3,000 2,050 -950 -31.67% Sig Favorable
Property Taxes 3,000 3,000 0 0% - -

A. Cost of Food Sold

Cost of Food Sold shows significant and unfavorable variance during the period.

Note:

$ Variance = Actual - Budget

% Variance = $ Variance / Budget * 100

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are given the following static budget report: Budget            Actual              Variance Unit Sales  &nbsp
You are given the following static budget report: Budget            Actual              Variance Unit Sales                                           10,000               15,000             5,000 F Variable Expenses:     Commissions                                  $30,000 $33,000 $3,000 U     Advertising                                      $1,000 $1,200 $200 U     Travel                                              $10,000 $11,000 $1,000 U     Samples                                          $2,500 $2,300 $200 F Total Variable                                     $43,500 47,500 $4,000 U Fixed Expenses     Rent                                                 $5,000 $5,000 0     Salaries – Sales                               $2,000 $2,000 0     Salaries – Office                              $1,200 $1,200 0     Depreciation                                    $1,500 $1,500 0 Total Fixed                                          $9,700 $9,700             0 Total Expenses $53,200 $57,200 $4,000 U Prepare a flexible budget analysis and explain whether you believe that costs were controlled.  How do the results of...
Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product....
Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 5 pounds at $8.00 per pound $ 40.00 Direct labor: 3 hours at $15 per hour 45.00 Variable overhead: 3 hours at $9 per hour 27.00 Total standard variable cost per unit $ 112.00 The company also established the following...
QUESTION 2 You are given the following information for last year for Four Corners, Inc. (FCI)....
QUESTION 2 You are given the following information for last year for Four Corners, Inc. (FCI). Sales $200,000 Increase in net fixed assets $15,000 SG&A Expenses $15,000 Cost of goods sold $80,000 Interest expense $9,000 Depreciation expense $8,000 Taxes $21,000 New equity raised $8,000 Net increase (or decrease) in long-term debt ($2,500) Dividends $15,000 What was the operating cash flow for FCI? A. $ 79,600 B. $ 88,600 C. $ 84,000 D. $ 66,000 E. $ 75,000 F. $ 70,600
Roles What do they know Sales Manager You want to sell 10,000 units in April, 15,000...
Roles What do they know Sales Manager You want to sell 10,000 units in April, 15,000 in May, 8,000 units in June at $20 each. Business Development You know that our competitor is struggling with manufacturing and supply is low, and your POV is that demand will increase by 10% in April and May Manufacturing Supervisor You have seen that raw material supply shipments are being delayed - and you want to keep 15% of next months production needs on...
Jake’s Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost...
Jake’s Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost per Repair-Hour   Wages and salaries   $ 21,300      $ 15.00       Parts and supplies       $ 7.30       Equipment depreciation   $ 2,730      $ 0.40       Truck operating expenses   $ 5,780      $ 1.80       Rent   $ 4,670              Administrative expenses   $ 3,860      $ 0.60         For example, wages and salaries should be $21,300 plus $15.00 per repair-hour. The company expected to work 3,000 repair-hours in May, but...
[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable...
[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 6 pounds at $8.00 per pound $ 48.00 Direct labor: 3 hours at $14 per hour 42.00 Variable overhead: 3 hours at $5 per hour 15.00 Total standard variable cost per unit $ 105.00 The company also established the following cost formulas...
[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable...
[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 6 pounds at $8.00 per pound $ 48.00 Direct labor: 3 hours at $14 per hour 42.00 Variable overhead: 3 hours at $5 per hour 15.00 Total standard variable cost per unit $ 105.00 The company also established the following cost formulas...
[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable...
[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 5 pounds at $9.00 per pound $ 45.00 Direct labor: 3 hours at $14 per hour 42.00 Variable overhead: 3 hours at $9 per hour 27.00 Total standard variable cost per unit $ 114.00 The company also established the following cost formulas...
Swain Company manufactures one product, it does not maintain any beginning or ending inventories, and its...
Swain Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. The company’s beginning balance in Retained Earnings is $65,000. It sells one product for $170 per unit and it generated total sales during the period of $603,500 while incurring selling and administrative expenses of $54,500. Swain Company does not have any variable manufacturing overhead costs and its standard cost card for its only product is as follows: (1) Standard...
[The following information applies to the questions displayed below.] Phoenix Company’s 2017 master budget included the...
[The following information applies to the questions displayed below.] Phoenix Company’s 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales $ 3,150,000 Cost of goods sold Direct materials $ 930,000 Direct labor 225,000 Machinery repairs (variable cost) 60,000 Depreciation—Plant equipment (straight-line) 300,000 Utilities ($60,000 is variable) 180,000 Plant management salaries 210,000 1,905,000 Gross profit 1,245,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT