Congratulations! Your work on the Air-Accountant shoes was so helpful that the company was bought out by Nike Inc and you made enough money you never have to work again! Butwhat fun would that be? So you started your own accounting consulting company called You Can Account On Us. Recently, you were hired by a company named Cow Hopp to help analyze budget variances. Information for Cow Hopps Commemorative Milk Glasses is below:

Additional data for the Milk Glasses is as follows:

You want to make a good impression on the folks at Cow Hopp so please produce a report showing the Quantity and Price variances for DM, DL, and Var MOH. In addition, please compute the volume and spending variances for Fixed MOH.

Cow Hopp is considering a few changes. Please rerun your variances with the following changes:

1. Management has heard that material costs are starting to run higher. As a result, it has chosen to find a new supplier. It projects that with the new supplier, it could have purchased the clay for $2.00 per pound but it would have used 218,000 pounds to produce the same 118,000 units. Should management switch to the new supplier?

2. Management has also heard it is taking longer than expected to make these glasses. As a result, it plans to use labor that is more skilled. The new influx of skilled labor will take 264,000 hours to make the 118,000 glasses and will cost $3,498,000. Should management make this change?

When you are finished, please submit this to the owner of Cow Hopp, Miss Bessie via Blackboard. Be sure to provide a professional email and provide some analysis of the results as well (how are they doing? Where can they improve?).

Go Accountant Go!

Sincerely,

C.P. Accountant

DM (Clay) DL Var MOH (based on DL) Standard Quantity 1.8 lbs 2.25 hrs 2.25 hrs Standard Price/Rate $ 1.95 per lb $ 13.50 per hr $ 1.25 per hr Standard Unit Cost $ 3.51 $ 30.38 $ 2.81 Fixed MOH $300,000 estimated total 125,000 estimated units Units produced & sold Pounds of clay used Total cost of clay Labor hours worked Total DL cost Total Var MOH cost 118,000 209,000 $ 434,720 266,000 $ 3,452,505 $ 368,970 Total Fixed MOH cost $ 295,000