eBook Print Item Basics of Variance Analysis, Variable Inputs Basuras Waste Disposal Commpany has a long-term contract with several large cities to collect garbage and trash from residential customers. To facilitate the collection, Basuras places a large plastic contalner with each household. Because of wear and tear, growth, and other factors, Basuras places about 200 000 new containers each year (about 20% of the total households Several years ago, Basuras ded led to manufacture its own containers as a cost-saving measure. A strategically located plant involved in this type of manufacturing was acquired. To help ensure cost effidency, a standard cost system was installed in the plant. The following standards have been established for the product's varlable inputs: Standard Standard Price (rate in $) 3.50 11.00 3.00 Standard Quantity Direct materials Direct labor Variable overhead 2 Ibs. 1.70 hrs. 1.70 hrs, Cost $42.00 18.70 5.10 $65.80 During the first week in January, Basuras had the following actual results Units produced Actual labor costs Actual labor hours Materials purchased and used Actual variable overhead costs 6,000 $118,800 10,800 69,000 lbs. $3.55 39,750 The purchasing agent located a new source of slightly higher-quality plastic, and this material was used during the first week in January, Also, a new manufacturing process was implemented on a trial basis. The new process required a slightly higher level of skilled labor. The higher-quality material has no effect on labor utlization. However, the new manufacturing process was expected to reduce materials usage by 0.25 pound per 1. Conceptual Connection: Compute the materials price and usage varlances. Assume that the 0.25 pound per container reduction of materials occurred as expected and that the remaining effects are all attributable to the higher-quality material. Would you recommend that the purchasing agent continue to buy this qualty, or should the usual quality b. purchased? Assume that the quality of the end product is not affected significantly mone Ceck My work uses emaning Next work saved