Bedco manufactures bed sheets and pillowcases which it supplies to a major hotel chain. It uses a

Question:

Bedco manufactures bed sheets and pillowcases which it supplies to a major hotel chain. It uses a just-in-time system and holds no inventories.The standard cost for the cotton which is used to make the bed sheets and pillowcases is $5 per m². Each bed sheet uses 2m^2?of cotton and each pillowcase uses 0.5m². Production levels for bed sheets and pillowcases for November were as follows:

The actual cost of the cotton in November was $5.80 per m². ?48 000 m^2?of cotton was used to make the bed sheets and 95 000 m^2?was used to make the pillowcases.The world commodity prices for cotton increased by 20 percent in the month of November. At the beginning of the month, the hotel chain made an unexpected request for an immediate design change to the pillowcases. The new design required 10 percent more cotton than previously. It also resulted in production delays and therefore a shortfall in production of 10 000 pillowcases in total that month.

The production manager at Bedco is responsible for all buying and any production issues which occur, although he is not responsible for the setting of standard costs.

Required:(a) Calculate the following variances for the month of November, for both bed sheets and pillow cases, and in total:(i) Material price planning variance;(ii) Material price operational variance;?

(iii) Material usage planning variance;(iv) Material usage operational variance.?

(b) Assess the performance of the production manager for the month of November.