Chapter 17 – Additional Topics in Variance Analysis
17–21
17–33. (30 min.) Nonmanufacturing Cost Variances: Springfield Bank.
Incidental office costs comprise the variable costs. Salaries and the fixed office costs are
all fixed. Variance analysis for the two classes of overhead is as follows:
Actual Costs
Combined
Price and
Efficiency
Variance
Flexible Budget
(Standard Allowed
for Actual Output)
Correspondence,
Supplies, etc.
$14,400 x 1.12
= $16,128
$60 x 240
= $14,400
$1,728 U
Loan processor
and other costs
$68,000 + $63,000
= $131,000
0.5a x ($80,000 +
$50,000 + $134,000)
= $132,000
$1,000 F
Budget
Applied
$132,000
$132,000 x (240 ÷ 225)
= $140,800
$8,800 F
a 0.5 represents one-half year.
Chapter 17 – Additional Topics in Variance Analysis
17–22
17–34. (30 min.) Performance Evaluation In Service Industries: Bay Area Bank.
Actual
Costs
Price
Variance
Actual
Inputs at
Standard
Price
Efficiency
Variance
Flexible
Budget
Activity
Variance
Master
Budget
New
Accounts
$572,250
(Ignored)
$30 x
19,200
accounts
=
$576,000
$30 x
20,000
accounts
=
$600,000
$3,750 F
$24,000 F
Account
Maintenanc
e
$18,000
$17,700
$0.45 x
45,000
= $20,250
$0.45 x
43,200
= $19,440
$300 U
$2,550 F
$810 U
17–35. (10 min.) Investigating Variances: Springfield Bank.
Answers will vary. From the variance analysis above, it would be useful to better
Chapter 17 – Additional Topics in Variance Analysis
17–23
17–36. Revenue Analysis Using Industry Data and Multiple Product Lines: Peninsula
Candy Co.
a. Sales price and activity variances.
Flexible
Master
budget
budget
(AP – SV) x AQ
(SP – SV) x AQ
(SP – SV) x SQ
(1,600 x $0.03a)
+ (2,000 x $0.04)
$1,162 – $915b
+ (4,200 x $0.035)
$1,200 – $920
= $247
= $275
= $280
$28 U
$5 U
Sales price
Sales activity
variance
variance
a Unit contribution margins calculated from master budget panel as follows:
Unit margin = Contribution margin ÷ Sales units.
b $915 = [1,600 x ($140 ÷ 2,000) + 2,000 x ($320 ÷ 2,000) + 4,200 x ($460 ÷ 4,000)].
b. Two solutions are possible when calculating the market share variance, depending
upon the figure used for the left column. The examples in the text use the flexible
budget amount. However, those examples involve only one product, whereas this
Chapter 17 – Additional Topics in Variance Analysis
17–36b. (continued)
Contribution margin variance
Actual Quantities at
Standard Mix and
Industry
Master
Standard Prices
Effect
Budget
$280 x (76,000 ÷ 80,000)
$273a
= $266
$280
$7 F
$14 U
Variance
$275
$266
$9 F
$14 U
Chapter 17 – Additional Topics in Variance Analysis
17–25
17–37. (20 min.) Sales Mix And Quantity Variances: Peninsula Candy Co.
Flexible Budget
Mix
Varian
ce
Quantity
Variance
Master Budget
(SP – SV) x AQ
(SP – SV) x ASQ
(SP – SV) x SQ
(1,600 x $0.03)
(7,800
x
2,0
00
x
$0.03)
(2,000 x $0.03)
8,0
00
+ (2,000 x
$0.04)
+
(7,800
x
2,0
00
x
$0.04)
+ (2,000 x $0.04)
8,0
00
+ (4,200 x
$0.035)
+
(7,800
x
4,0
00
x
$0.035)
+ (4,000 x
$0.035)
8,0
00
= $275
= $273
= $280
$2 F
$7 U
$5 U
Activity Variance
Chapter 17 – Additional Topics in Variance Analysis
17–26
17–38. (45 min.) Materials Mix And Yield Variances: Houston Corporation.
a. and b.
Efficiency Variance
Material
Actual
(AP x
AQ)
Purchase
Price
Variance
(SP x AQ)
Mix
Variance
(SP x ASQ)
Yield
Variance
Flexible
Production
Budget
Z-Alpha
$423,360
$9 x
50,400 =
$453,600
$9 x (.48a x
104,400) =
$9 x 50,112 =
$451,008
$9 x (600 x 80)
= $432,000
$30,240 F
$2,592 U
$19,008 U
$21,600 U
Z-Beta
$400,464
$12 x
37,040 =
$444,480
$12 x (.36a x
104,400) =
$12 x 37,584
= $451,008
$12 x (450 x 80)
= $432,000
$44,016 F
$6,528 F
$19,008 U
$12,480 U
Z-Gamma
$417,216
$24 x
16,960
=
$407,040
$24 x (.16a x
104,400) =
$24 x 16,704
= $400,896
$24 x (200 x 80)
= $384,000
$10,176 U
$6,144 U
$16,896 U
$23,040 U
a Standard mix: .48 = 600 ÷ 1,250; .36 = 450 ÷ 1,250; .16 = 200 ÷ 1,250.
Chapter 17 – Additional Topics in Variance Analysis
17–27
17–38. (continued)
Efficiency Variance
Actual
Purchase
Price
Variance
(SP x AQ)
Mix
Variance
(SP x ASQ)
Yield
Variance
Flexible
Production
Budget
Total
$1,241,040
$1,305,120
$1,302,912
$1,248,000
$64,080 F
$2,208 U
$54,912 U
$57,120 U
Chapter 17 – Additional Topics in Variance Analysis
17–28
17–39. (30 min.) Labor Mix and Yield Variances: Davenport Construction Associates
a. and b.
Efficiency Variance
Actual
Purchase
Price
Variance
(SP x AQ)
Mix
Variance
(SP x ASQ)
Yield
Variance
Flexible
Production
Budget
($52 x 2,200) +
($46 x 2,600) +
($30 x 1,440)
= $277,200
($48 x 2,200) +
($42 x 2,600) +
($30 x 1,440)
= $258,000
($48 x 1/3 x 6,240) +
($42 x 1/3 x 6,240) +
($30 x 1/3 x 6,240)
= $249,600
($48 x 2,000) +
($42 x 2,000) +
($30 x 2,000) =
$240,000
$19,200
U
$8,400 U
$9,600 U
$18,000 U
17–40. (10 min.) Investigating Variances: Davenport Construction Associates
Answers will vary. From the variance analysis above, the purchase price variance is fairly