Question
Acme Brick company uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated when the
Acme Brick company uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated when the variance is greater than either $5000 or 10% of the standard cost. During June, the company purchased and used 9,500 pounds of concrete for $5 per pound. It was able to make 20,000 bricks. It's standard quantity of materials allowed is 0.45 pound of contort brick at a standard price of $6 per pound.
A. Determine Acme's material usage variance and whether it is favorable or unfavorable.
B. Should the variance be investigated?
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