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Month Total Variance % Deviation Total Variance Price Variance % Deviation Price Variance Usage Variance % Deviation Usage Variance January $3,246.77 U 2.6842% $1,432.37 U

Month

Total Variance

% Deviation

Total Variance

Price Variance

% Deviation Price Variance

Usage Variance

% Deviation Usage Variance

January

$3,246.77 U

2.6842%

$1,432.37 U

1.1667%

$1,814.40 U

1.5000%

February

$3,179.98 U

2.7604%

$1,509.58 U

1.2917%

$1,670.40 U

1.4500%

March

$2,777.24 U

2.5830%

$1,271.96 U

1.1667%

$1,505.28 U

1.4000%

April

$8,136.00 U

9.4167%

$4,680.00 U

5.2083%

$3,456.00 U

4.0000%

May

$18.98 U

0.0271%

$3,522.98 U

5.2917%

$3,504.00 F

5.0000%

June

$8,501.38 U

13.6240%

$7,596.58 U

12.0000%

$904.80 U

1.4500%

July

$1,541.64 U

2.7687%

$706.44 U

1.2500%

$835.20 U

1.5000%

August

$1,617.83 U

2.7181%

$754.79 U

1.2500%

$863.04 U

1.4500%

September

$506.25 F

0.7031%

$2,306.25 F

3.1250%

$1,800.00 U

2.5000%

October

$251.46 F

0.3046%

$2,728.26 F

3.2083%

$2,476.80 U

3.0000%

November

$3,744.42 U

3.8240%

$1,296.42 U

1.2917%

$2,448.00 U

2.5000%

December

$877.92 F

0.7750%

$1,387.68 U

1.2500%

$2,265.60 F

2.0000%

Annual

$31,128.60 U

2.9830%

$19,124.28 U

1.8118%

$12,004.32 U

1.1504%

Month

Events

For each of the events, you decided to indicate whether and how the event would impact the Materials Price or Materials Usage Variance by placing an X in the appropriate bracketed area. If you determined the event would have affected the variance(s), you also noted whether corrective action could be taken. You knew this would be a great help when preparing your presentation. Finally, to keep it all straight, you added the last column to show which months were affected by the event. You need to be careful so that it is clear which event you are referring to when the month has multiple events!

Affect the Price Variance?

Affect Usage Variance?

Is There a Corrective Action?

Indicate the Months Affected

January

The company predicted that the price of materials would increase so the purchasing manager decided to buy several months of materials before the price increase.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

February

Employees were paid their annual bonus in February.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

March

A batch of supplies were received that were of slightly lower quality. The production department was able to use them slowly along with good supplies so that the company did not need to write off the inventory or make returns.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

April

In April the clerk in accounting made an input error and as a result records showed that that more material than actual, was added to the production process.

Supplies are usually delivered by rail but there was a shutdown in the railroad and now supplies must come by truck for 2 months, starting in April, which is more expensive.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

[Yes]

[No]

May

The input error from April reversed.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

June

Our materials supplier, which was our only materials supplier, had a temporary outage that lasted through June and at the last minute we had to find a temporary (emergency) supplier. Since it was last minute, the supplier charged premium pricing and had to expedite shipping.

A major equipment purchase was planned for June but was delayed until August.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

[Yes]

[No]

July

Many of our employees took vacation to enjoy summer activities.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

August

Our supplier informed purchasing that they were going to halt production for maintenance and requested that our company take a two-month supply of materials now.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

September

Union negotiations were in full swing and the production manager noted that employees seemed a bit disgruntled. He also noticed that they were taking more personal breaks and seemed less conscientious about the quality of their work. The production manager also said that it seemed like there was more waste.

Material purchase price for the containers is based on a contract tied to the price of oil. Oil prices declined during the months of September and October.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

[Yes]

[No]

October

OPEC is meeting this month to negotiate supply levels of oil for the following year.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

November

Toward the end of November, due to the deteriorating efficiency of the production machinery it was decided to take a plant outage and accelerate the maintenance originally scheduled for March of the following year.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

December

The plant started back up in early December and the maintenance performed in November appears to have resolved the efficiency issues.

[Favorable]

[Unfavorable]

[No Effect]

[Favorable]

[Unfavorable]

[No Effect]

[Yes]

[No]

Complete the tables above and:

  1. In the space provided below, briefly describe and number your recommendations. You may have noticed issues that are not directly related to the events included in the above tables.

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