Question
Let's continue with our story on coach Rural Meyer.Rural is concerned that his shady activities did not bring profitable results. He wanted to investigate his
Let's continue with our story on coach Rural Meyer.Rural is concerned that his shady activities did not bring profitable results. He wanted to investigate his spending variances in greater detail. The six variances as they relate to manufacturing of replica memorabilia are listed as follows:
Materials QuantityVariance$750 unfavorable
Materials PriceVariance$5,500 favorable
Labor EfficiencyVariance$700 unfavorable
Labor RateVariance$4,700unfavorable
Variable Overhead EfficiencyVariance$1,600favorable
Variable Overhead RateVariance$1,800 unfavorable
A.Rural Meyer lacks the knowledge to deal with these variances. He asks you, a much more intelligent soul, for help. Which two variances would you recommend that Rural Meyer investigate in great detail? Give me at least one example of something that could contribute towards each of the two variances to be investigated. (5points)
B.Assume variable overhead is applied on the basis of machine hours. The production of each unit of replica memorabilia has a standard of using 4 machine hours at a standard rate of $10 per machine hour. In reality, Rural's shady workers incurred an actual variable overhead rate of $13 per machine hour. 250 total units of replica memorabilia were produced. What was the actual number of total machine hours? (5points)
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