Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Robotsy, Inc., produces robots sold at a variety of retail stores throughout the world. Standard cost information for each robot is presented as follows: Direct
Robotsy, Inc., produces robots sold at a variety of retail stores throughout the world. Standard cost information for each robot is presented as follows:
Direct materials | $60.00 |
Direct labor | 40.00 |
Variable overhead | 30.00 |
Total | $130.00 |
Robotsy produced and sold 100,000 robots for the year and encountered the following production variances:
Direct materials price variance | (300,000) | Favorable |
Direct materials quantity variance | 290,000 | Unfavorable |
Direct labor rate variance | (170,000) | Favorable |
Direct labor efficiency variance | (140,000) | Favorable |
Variable overhead spending variance | 150,000 | Unfavorable |
Variable overhead efficiency variance | (210,000) | Favorable |
Total variable production cost variance | (380,000) | Favorable |
Company policy is to investigate all unfavorable variances above 5 percent of the flexible budget amount for direct materials, direct labor, and variable overhead.
- Identify the variances that should be investigated according to company policy. Show calculations to support your answer.
- What recommendations would you make for the company’s current policy?
- Identify the highest favorable variance and highest unfavorable variance and provide one possible cause of each variance.
- Victoria Posey, the manager at Robtsy, Inc., reviewed the company’s variance analysis report. The materials price variance of $(300,000) was the most significant favorable variance for the month, and the materials quantity variance of $290,000 was the most significant unfavorable variance. Victoria would like to reward the company’s purchasing agent for achieving such substantial savings by giving him a $2,000 bonus while not providing any bonus for the production manager.
- Do you agree with Victoria’s approach to awarding bonuses? Explain.
- What circumstances might lead to the conclusion that the purchasing agent should not receive a bonus?
Step by Step Solution
★★★★★
3.37 Rating (153 Votes )
There are 3 Steps involved in it
Step: 1
Answer Pagt the infoomation parovided Inthe As In the ead 2ohots sold at question Investigati...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started