Reference no: EM131227836
Calculating variances
Application: Calculating Variances and Analyzing the Results
While many organizational costs can be planned for, the actual results may vary from the initial projections. Assessing how these variances impact the bottom line is an essential task of many managers.
For this Assignment, review the Learning Resources for this week and consider how they might apply to the scenario presented. Consider how variance analysis and the results obtained from conducting such an analysis might impact decision making.
Spine Line is a manufacturer of high-quality products designed to help support healthy spines. Their newest product offering is a massage chart. Below is the standard cost structure for the chair:
Standard Cost Sheet: Massage Chair
|
Metal tubing
|
6 meters @ $3
|
$18.00
|
|
Leather
|
2 square meters @ $7
|
$14.00
|
|
Padding
|
3 kilograms @$4
|
$12.00
|
|
Direct labor
|
4 hours @ $15
|
$60.00
|
|
Total standard cost
|
|
$104.00
|
This month, Spine Line manufactured 500 massage chairs. The following costs were incurred:
Actual Costs Incurred for the Month: Massage Chair
|
Metal tubing
|
3,100 meters
|
$9,455
|
|
Leather
|
1,100 square meters
|
$7,722
|
|
Padding
|
1,600 kilograms
|
$6,560
|
|
Direct Labor
|
1,800 hours
|
$27,270
|
|
Total cost
|
|
$51,007
|
Adapted from: Zimmerman, J. L. (2014). Accounting for decision making and control (8th ed.). New York: NY: McGraw-Hill, "Healing Touch", p. 565.
Suppose you are the senior controller for Spine Line and you plan to perform a variance analysis of the massage chairs manufactured to determine if the standards are being met. Once you have completed the analysis, you plan to show it to the production department manager and ask for an explanation of any variances that you believe should be examined.
The Assignment:
• Part 1: Calculate all materials and labor variances in a spreadsheet by using a program like Excel. Be sure to include price, quantity, wage rate, and labor efficiency variances.
• Part 2: Prepare a memo to your subordinate, using a program like Word.
o Summarize and analyze the actual costs in relation to the standard costs incurred for the month.
o Ask for clarification of any variances that need to be investigated.
|
Fraction of the initial amount of krypton
: Imagine Clark Kent is investigating the half-life of Krypton-8 and finds that it is approximately 10.8 years. \What fraction of the initial amount of Krypton-8 would still be remaining after 60 years?
|
|
Dimensional analysis and giant ones
: A one minute advertisement on a local television station during prime time(8-10pm on week nights) costs the advertisement $12,800. To the nearest cent ,how much does the advertisement cost per second? Show your work using the dimensional analysis ..
|
|
Describe the costing system adopted
: Describe the costing system adopted and how it is used to arrive at the cost of products or services - Does the costing system meet the needs of the organization? Discuss.
|
|
Effective rate of compound interest rate or investment
: Find the effective rate of the compound interest rate or investment. (Round your answer to two decimal places.)16%compounded monthly. [Note: This rate is a typical credit card interest rate, often stated as1.3%per month.
|
|
Find all materials and labor variances in a spreadsheet
: Calculate all materials and labor variances in a spreadsheet by using a program like Excel. Be sure to include price, quantity, wage rate, and labor efficiency variances.
|
|
Albert einsteins most famous theory
: What was Albert Einsteins most famous theory and why was it the most famous?
|
|
How can commercial banks create money
: (Creating Money) Often it is claimed that banks create money by making loans. How can commercial banks create money? Is the government the only institution that can legally create money?
|
|
Determining the real number
: Prove that if p ∈ N is a prime number, then there exist a real number x, such that x2 = p. Moreover, x ∉ Q.
|
|
Is the same true of lowering the discount rate
: What would happen if the Fed bought U.S. bonds from, or sold them to, the banking system?
|