Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Carol Morgan manages the production division of Adams Corporation. Ms. Morgans responsibility report for the month of August follows: Budget Actual Variance Controllable costs Raw

Carol Morgan manages the production division of Adams Corporation. Ms. Morgans responsibility report for the month of August follows:

Budget Actual Variance
Controllable costs
Raw materials $ 28,090 $ 33,390 $ 5,300 U
Labor 11,340 16,920 5,580 U
Maintenance 3,300 5,100 1,800 U
Supplies 1,850 900 950 F
Total $ 44,580 $ 56,310 $ 11,730 U

The budget had called for 5,300 pounds of raw materials at $5.30 per pound, and 5,300 pounds were used during August; however, the purchasing department paid $6.30 per pound for the materials. The wage rate used to establish the budget was $21.00 per hour. On August 1, however, it increased to $24.00 as the result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to use 110 hours of overtime at a $36.00 rate. The projected 540 hours of labor in the budget would have been sufficient had it not been for the 110 hours of overtime. In other words, 650 hours of labor were used in August.

Required

  1. When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control. Is she correct?

  2. Calculate the variances of the items Ms. Morgans controlled during the period.

image text in transcribed

image text in transcribed

Complete this question by entering your answers in the tabs below. Required A Required B When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control Is she correct or incorrect? Complete this question by entering your answers in the tabs below. Required A Required B Calculate the variances of the items Ms. Morgan's controlled during the period. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variances Total

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Digging For Disclosure Tactics For Protecting Your Firms Assets From Swindlers, Scammers, And Imposters

Authors: Kenneth S. Springer, Joelle Scott

1st Edition

0131385569, 9780131385566

More Books

Students also viewed these Accounting questions

Question

=+3. Who can provide information for evaluation?

Answered: 1 week ago