Assume R&N Manufacturing Has Always Used a Static Budget Approach

question 70

Essay

Assume R&N Manufacturing has always used a static budget approach to analyze variances, but the new controller has suggested that the company implement a flexible budget strategy.

Required:

Answer the following questions relating to flexible budget variances.

a. What are the direct materials and direct labor variances that the controller will be analyzing?

b. Give an example of what would cause each variance to be favorable.

c. Give an example of what would cause each variance to be unfavorable.

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Definitions:

Airway

The part of the respiratory system through which air flows, starting from the nose and mouth down to the bronchi of the lungs.

Breathing

The physical process involving the inhalation and exhalation of air, essential for life.

Prophylactic

Preventing disease.

Poison

A substance that, if taken internally or applied externally, is a threat to life.