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XcomSoftware operates a 24-hour help line to answer customer questions. To control the cost of operations, the company compares the actual time required to answer customer questions with a standard time of 5 minutes per customer call. Monthly bonuses are awarded if the standard is achieved. In the past five months, the number of calls has decreased from approximately 7,000 to approximately 6,000. The average time per call has decreased from 6 minutes to 3.80 minutes. However, a software magazine recently gave the company a poor evaluation in an article that reviewed the support that software companies provide customers.
Required:
a. Does the favorable variance for response time indicate good performance?
b. What might account for the improvement in performance related to time per call and the poor rating of customer support?
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EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo.
Montson, Inc. produces a product requiring three square feet at $6 per square foot. If the desired ending inventory is $18,000 and the beginning inventory is $36,000, how many units must Montson produce to make direct materials purchases $54,000?
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Further information was determined by examining the company's 2014 income statement.
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