In responding to below post , discuss how your business and variance is similar to and different from their business and variance. Tie the concepts from their posts to examples from the text or other authoritative research sources.

Post :

Towe Iron Works manufactures fabricated steel and metal as well as other steel products used for structural purposes. The three primary manufacturing costs are direct materials, direct labor, and factory overhead. Variances in these costs will often occur with all manufacturing companies. A variance is the difference between actual results and expected or budgeted results. These variances can be favorable or unfavorable and casn result from price changes or efficiency issues.

For example: Towe Iron Works is budgeted to produce 250,000 units using 10 lbs. of raw material per unit at a cost of $3 per pund of raw material used.

Their direct materials cost budgeted would be $7,500,000 (2,500,000 lbs of raw material used at $3 per pund).

The company actually used 3,300,000 lbs of raw material to produce the 250,000 units thus resulting in an unfavorable direct materials efficiency variance

At the same cost of $3 per pund they actually spent $9,900,000 on direct materials an unfavorable variance of $2,400,000

An unfavorable direct materials variance is likely the result of waste during the manufacturing process. This could be caused by unmotivated workers that have been sloppy. A bonus plan that gives employees an incentive to meet budget standards would likely motivate the work force. If say $1 million in bonuses can reduce the $2.4 million they are over budget in direct materials it is a definite win-win for both