eost center varianees Ralph manages a generie produetion faeility. For simplicity, there is no overhead, only direet

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eost center varianees Ralph manages a generie produetion faeility. For simplicity, there is no overhead, only direet labor and direet material. The LLAs are:

direet labor DL = 15(2)q; and direet material DM = 40(1.1)q, where q denotes units of output. The standard price for labor is 15 per hour, and the standard price for material is 40 per unit. During a recent period, 1,100 units were produced, labor eost totaled 36,000 (with an average price of 18 per hour), and material eost totaled 50,000 (with an average price of 40 per unit).

a] Calculate all variances.

b] Whieh variances do you feel should be used to evaluate Ralph's performance?

Carefully explain your reasoning.

e] Ralph eomplains that a new firm moved in next door and hired a number of the employees. This forced Ralph to take on newand more eostly workerso Where does this show up in the variances? Should Ralph be held responsible for this labor tumover?

Explain your reasoning.

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