Blue Stripe is a company that designs, manufactures and sells a range of athletic shoes

made using natural and recycled materials. All shoes are hand finished to ensure high levels of quality.

The standard cost for a pair of training shoes is as follows:

INPUT COST

Rbber pelleis 0. 16 kg @ $15 per kg $2.40

Olher materials $7.00

Labour 1.2 hours @ $22 per hour 26.40

Overheads $11.00

Total cost $46.80

It was budgeted that 64,500 pairs of shoes would be produced in December, but actual reduction was lower due to a machine breakdown and so only 62,000 pairs of shoes were actually produced, taking 68.200 labour

hours. The actual cost of rubber pellets in December was $168,000 and 9,600 kg were used to make the shees, with no changes to the inventory of either raw materials or finished goods.

The world commedity prices for rubber pellets increased by 20% in the menth of December. Al the beginning et the month, the design was changed to improve efficiency. The new design requires 5% less rubber pellets than previously It alse resulled in workers having to adapt to the new designs

As a result of a new minimum wage introduced by the government, the rate of pay was increased te $24 per hour from the start of December. The actual labeur hours

worked in December was $1,705,000

a. Calculate the following variances for the month of December

() Material price planning and operational variances

(3 marks)

(1i) Material usage planning and operational variances

(3 marks)

(ili) Labour rate planning and operational variances

marks)

(3

(iv) Labor efficiency planning and operational variances

(3 marks)

The productien manager is responsible for all achtes that lake place within the factory, including employing production staff, and has control over wage rale The purchasing manager is responsible for souring all raw materials and negotiating the right price. All planning and budgeting decisions are made by the senior management

team.

b. Assess the performance of the production manager, purchasing manager and the senior managemen* team.