1. How would the distinction between fixed and variable costs help management in forecasting cash needs for the business?
2. Explain how a flexible budget can be used by management to help control costs.
3. Briefly explain to management the reasons why variances between actual and standard costs of materials might exist.
4. The accountant for JRH Corporation has noticed that historically, when there have been favorable labor rate variances, there have been unfavorable labor time variances. What factors could explain this phenomenon?
5. In a large company, the overall wage structure is determined by the personnel department. However, the manager of each producing department has limited control over the rates paid to individual workers. Who would be responsible for labor rate variances?
6. Explain how determination of standard costs enables managers to pinpoint responsibility for inefficient performance.