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Problem 1 worth 7 pts. The roofing company manufactures shingles. Standard Cost Sheet per shingle Direct materials Asphalt 1.5 pounds direct labor 0.01 hour Direct labor $0.07 per pound $11 per hour The following information is available regarding the company's actual operations for the period. Shingles produced Materials purchased: Asphalt Materials used Asphalt Direct labor Manufacturing overhead incurred: Variable Fixed Grading Rubric Each Variance calculation worth Each U or F designation 530,000 752,000 pounds 748,000 pounds 4,990 hours $0.08 per pound $12.25 per hour $10,978.0 $2.20 VOH rate per direct labor hour $59,000 1 pts. 0.5 pts. 1.5 pt. each for variance Comments 1 Total pts. Possible 7 points Required: Make sure you do not forget to label the variances U or F. You need to show your work either by cell reference or showing your calculation to the side. 1. Calculate the direct materials price and quantity variance. Direct-material purchase price variance should be based on material purchased, since you want to isolate the variance as soon as possible. See bottom page 418 Direct-material Quantity variance should be based on materials used, since this is monitoring the production efficiency. See top of page 418. Direct-material purchase price variance Direct Material Quantity variance 2. Calculate the direct labor rate and efficiency variances. Labor rate variance Labor Efficiency variance 5. Pick out the two variances that you computed above that you think should be further investigated. Explain why you picked these 2 variances and what might be the possible cause of the variances. Problem 2 Worth 4 pts. Standard cost systems can have motivational effects; some are desirable, some are not. Consider the following situation: The materials purchasing manager is paid a salary plus a bonus based on the net favorable materials price variance. Gene Due to the bankruptcy of a company in a related field, there is an opportunity to buy a key raw material. The standards for th Because of the bankruptcy, the company can obtain a higher grade, 4A, for $62 per ton. While the quality of the final produc there will be substantial savings in material yield and labor productivity if 4A is used. These savings are expected to be two- Required: A. How would an unfavorable price variance on a particular purchase affect the overall price variance for the year and the m B. Would the use of the materials price variance as a basis for the manager's bonus lead to a desirable or undesirable beha Explain, being sure to note whether the manager would likely pursue acquisition of the grade 4A material. Please type your response below in the text box provided and make sure your response has answered the questio than the textbook. nsider the following situation: materials price variance. Generally, this bonus amounts to 30 - 40% of the manager's total compensation. w material. The standards for this material call for grade 2A, usually purchased for $56 per ton. e the quality of the final product will be the same regardless of the grade of material used, avings are expected to be two-to-three times the additional cost of $6 per ton. variance for the year and the manager's bonus? a desirable or undesirable behavioral outcome? e 4A material. se has answered the questions thoroughly and you must include one outside references other Problem 3 Worth 4 pts. Standard costs are said to be useful in performance evaluation. Assume that the standard direct materials cost per unit of fi Required: A. Explain how such a standard can be used to evaluate performance. B. Why is the degree of controllability important when utilizing standard costs to evaluate performance? Please type your response below in the text box provided and make sure your response has answered the questio other than the textbook. direct materials cost per unit of finished product is $6 (three pounds at $2 per pound). erformance? nse has answered the questions thoroughly and you must include one outside references