Explain how the variances could explain the following

Assignment Help Accounting Basics

Reference no: EM13592076

The plant manager decides that what is needed is an objective appraisal of what should be done. He hires June Collins of Collins and Collins, CPAs. June recommends that the Charlotte plant should use standard cost variance analysis. While not all three product managers agree that this is the best course of action the plant manager makes the final decision and asks June to perform the analysis. June asks that the three product managers aggregate their production information. The following schedule is the result of the request.

Variance Analysis

Variance Stated as Variance
Materials Price Variance Per ounce price Favorable
Materials Quantity Variance Ounce per unit Unfavorable
Labor Rate Variance Per hour Unfavorable
Labor Efficiency Variance Time per unit Favorable

Required:
1. Explain how each of the above variances could be explained.
2. Explain how the variances could explain the following situations: For instance: Inspection time increase could be caused by either poor material leading to sub-quality products or using cheaper more inexperienced labor. This would result in a favorable materials price variance and/or an unfavorable labor efficiency variance indicating that the workers are taking too long to construct the product.

Each of the below situations are to be considered independent

Scrap Material decreased
Return Orders increased
Rework Time decreased
Average Unit Cost increased
Unexpected Downtime increased
Sales was less than budgeted

Volume-related revenue was less than anticipated (in this instance the company is selling.

Reference no: EM13592076

Questions Cloud

Conan obrien logging and lumber company owns 3300 acres of : conan obrien logging and lumber company owns 3300 acres of timberland on the north side of mount leno which was

Terry corporation had 300000 shares of common stock : terry corporation had 300000 shares of common stock outstanding at december 31 2010. in addition it had 90000 stock

At december 31 2011 and 2010 miley corp had 180000 shares : at december 31 2011 and 2010 miley corp. had 180000 shares of common stock and 10000 shares of 5 100 par value

On december 31 2010 dow steel corporation had 800000 shares : on december 31 2010 dow steel corporation had 800000 shares of common stock and 300000 shares of 8 noncumulative

Explain how the variances could explain the following : the plant manager decides that what is needed is an objective appraisal of what should be done. he hires june collins

Didde co had 300000 shares of common stock issued and : didde co. had 300000 shares of common stock issued and outstanding at december 31 2010. no common stock was issued

Sleek ride a company providing limo services has a december : sleek ride a company providing limo services has a december 31 year-end date. for sleek ride the following transactions

Brown corp is thinking of investing 70000 to start a : brown corp. is thinking of investing 70000 to start a bookstore. brown plans to withdraw 15000 from the business at the

In the current year company a is formed with 630000 in : in the current year company a is formed with 630000 in capital from the sale of 21000 shares of stock at 30 a share.

User Account

All Pages