Question
b) During the latter part of 2016 Bezo had undertaken a substantial review of its operations. This review had resulted in the company changing its
b) During the latter part of 2016 Bezo had undertaken a substantial review of its operations. This review had resulted in the company changing its supplier of the raw material. The new material sourced was more expensive at ?6.20 per kg the product designers believed that this new material was more cost effective and the quantity required for the product was reduced from 6 kg per unit to 5.5 kg per unit.The company has also negotiated a productivity agreement with the trade union representing production workers at the company. This new agreement would see production wages rise by ?0.70 per hour. Productivity would increase resulting in the standard hours required per unit to fall to 80% of the previous requirement. This new information has not been considered to date. As the junior management accountant you have been requested to extract detailed Planning and Operational variances for the direct labour and the Direct Materials for the first quarter of 2017a) Using variance analysis, reconcile the budgeted and actual contribution for the first quarter of 2017 using the data provided.
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