7-26 Price and efficiency variances. Modern Tiles Ltd. manufactures ceramic tiles. For January 2017, it budgeted to purchase and use 10,000 pounds of clay at
7-26Price and efficiency variances.Modern Tiles Ltd. manufactures ceramic tiles. For January 2017, it budgeted to purchase and use 10,000 pounds of clay at $0.70 a pound. Actual purchases and usage for January 2017 were 11,000 pounds at $0.65 a pound. Modern Tiles Ltd. budgeted for 40,000 ceramic tiles. Actual output was 43,000 ceramic tiles.
Required:
1.Compute the flexible-budget variance.
2.Compute the price and efficiency variances.
3.Comment on the results for requirements 1 and 2 and provide a possible explanation for them.
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Authors: Cynthia D Heagy, Constance M Lehmann
7th Edition
1111219516, 978-1111219512
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