Questions:
1. List and discuss briefly the three standards of accountability
2. Discuss how establishing standards benefits the following management functions: Performance evaluation and decision making.
3. Explain the source of variable overhead spending and efficiency variances and how these variances are computed.
4. What role does the budgeting activity play in managerial compensation and performance evaluation?
5. Why will there frequently be a difference between the budgeted cost of material in the material purchases budget and the budgeted cash disbursement for material in the cash budget?
6. Garfield Company
Garfield Company applies overhead based on direct labor hours and has the following available for the current month:
Standard:
Direct labor hours per unit 5
Variable overhead per DLH $.75
Fixed overhead per DLH
(based on 8,900 DLHs) $1.90
Actual:
Units produced 1,800
Direct labor hours 8,900
Variable overhead $6,400
Fixed overhead $17,500
1. Refer to Garfield Company. Compute all the appropriate variances using the three-variance approach.