This material available through bookboon.com is a free resource that includes 7 problems with worksheets and solutions published in 2011. Topics covered include performance evaluation of segments using margin, turnover, and ROI; flexible budget variances; materials, labor, and overhead variances; standard costing journal entries; and using flexible budgets to determine pricing. This exercise book is the second of four exercise books that correspond directly with the Budgeting and Decision Making online textbook.
Type of Material:
Open textbook of problems.
These problems would be ideal for in class group work or as additional practice outside of class.
Identify Major Learning Goals:
After completing the problems the user should be able to do the following:
Compute margin, turnover, and return on investment and rank investment decisions based on these measures (Problem 1).
Prepare a flexible budget and performance report and determine if the firm is operating efficiently (Problem 2).
Compute the total material variance and determine how much is related to price and how much is related to quantity (Problem 3).
Compute the total labor variance and determine how much is related to rate and how much is related to efficiency (Problem 4).
Compute variable and fixed overhead variances (Problem 5).
Prepare journal entries for the purchase and usage of materials and related variances; as well as the incurrence of labor costs and related variances using a standard costing system (Problem 6).
Prepare flexible budgets for different activity levels and determine the required selling price (Problem 7).
Target Student Population:
Undergraduate Managerial Accounting course(s). Ideal for introductory managerial accounting course but can be used as a refresher for upper level managerial accounting course.
Prerequisite Knowledge or Skills:
Basic understanding of flexible budgeting, standard costing, and variance analysis for manufacturing costs.
Each problem is clear and concise, and provides a complete demonstration of each concept. The use of each problem is flexible. Numbers and scenarios can easily be changed to provide additional practice. Worksheets for completing problems as well as the solutions are provided. Each problem summarizes relevant concepts from the associated text or a typical class lecture on the topics very well. Finally, each problem integrates the concepts into a decision making situation very nicely.
Users will need a basic understanding (probably by reading related textbook material) of the topics covered. No mention of reading the related material is made.
An error exists in the solution for Problem 5: the variable overhead efficiency variance is incorrect. The correct answer should be $47,500.
Potential Effectiveness as a Teaching Tool
The problems are designed to provide additional practice for flexible budget preparation, variance analysis, and standard cost systems. Concepts are reinforced progressively and build on prior concepts. Instructors can easily create new assignments by changing some of the amounts used in the problems. Each problem is very efficient in terms of providing practice and serving as a means of formative assessment.
Problems should be labeled to identify learning objectives as well as the prerequisite knowledge that is essential. Problems do not relate to each other in a manner that would demonstrate the relationships between concepts. Using one set of data that links the problems for computing variances and preparing the related journal entries would reinforce the relationship.
Ease of Use for Both Students and Faculty
The module is easy to use and has clear instructions. The problems can be used in class or as additional homework for practice. Worksheets and solutions for each problem are provided.
The module is not very engaging, interactive, or of high design quality. The pages are devoid of graphics or illustrations which would add interest. Ads are placed throughout the material. Accidentally clicking on one redirects users to another location. The problems merely serves the purpose of providing practice in computing variances.
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