Describe three reasons for an unfavorable direct manufacturing labor efficiency variance?

Describe three reasons for an unfavorable direct manufacturing labor efficiency variance?

1. hiring under skilled workers-less efficency
2. inefficient scheduling of work
3. poor maintenance of machines

List 4 reasons for using standard costs.

List 4 reasons for using standard costs.

1. Pricing decisions.
2. cost management.
3. budgetary planning and control.
4. Financial statement preparation.

Describe the steps in developing a flexible budget.

Describe the steps in developing a flexible budget.

1. Identify the actual quantity of output.
2.Calculate the flexible budget for revenues based on budgeted selling price and actual quantity of output.
3.Calculate the flexible budget for costs based on budgeted variable cost per output standard quantity of output and budgeted fixed costs.

Why might managers find a flexible budget analysis more informative than a static budget analysis?

Why might managers find a flexible budget analysis more informative than a static budget analysis?

A FBA is a better measure of operating performance because it compares actual revenues to budget revenues and actual cost to budget costs. It helps managers gain more insight into causes of variances.

What is the key difference between a static budget and a flexible budget?

What is the key difference between a static budget and a flexible budget?

Static budget- is based on the level of output at the beginning of the period.

Flexible budget- is based on the actual output level in the budget period.

Distinguish between a favorable variance and an unfavorable variance.

Distinguish between a favorable variance and an unfavorable variance.

A favorable variance has a result of increasing operating income relative to the budgeted amount. An unfavorable variance has a result of decreasing operating income relative to the budgeted amount