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Please do not give me the same answers that are clearly marked wrong. Measuring the Effects of Decisions on standard Cost Variances (Comprehensive) The following
Please do not give me the same answers that are clearly marked wrong.
Measuring the Effects of Decisions on standard Cost Variances (Comprehensive) The following five unrelated stuations affect one or more standard cost variances for materials labor (assembly) and overhead, For each of the situations, compute the ampunt of the effect for one month on each variance loted. indicate whether the effect is favorable or unfavorable. Assume that the standards are not changed in response to these situations: Note: Round your answers to two decimal places 1.5ally Smith a production worker, anounced her intent to resign to accept another job paying 51.75 more per hour, To keep Sally. the production manager agreed to raise her salary from $12 to $14 per hour, sally works an average of 280 regular hours per month. Eficct on isbor rate warlances 2. At the beginning of the month a suppher of a component used in our product notified us that because of a minor design improvernent, the price will be increased by 10s above the current standard price of $125 per unit. As a result of the improved design, we expect the number of defective components to decrease by a0 units per month. On average. 1.920 units of the componert are purchased each month. Defective units are ladentified prior to use and are not returnable. Effect on materials price variance 3 tefect on materiak quantity variance 3 x x 3. in an effort to meet a deadline an a rush order in Department A the plant monager resssigned several higherskalled workers from Department B for a total of 576 labor hours. The average salary of the Department B workers was $2.15 more than the standard $11.00 per hour rate of the Department A workers. 5 ince they were not accustomed to the work the average Departrnent 1 worker was able to produce only 24 units per hour insteid of the standard 36 units per hour. iConsider only the effect on Departrnent A laborvarances) Effect on labor rate variances Effect on labor efficiency variances x x 4, Robbie Waltoce is an inspector who earns a base salary of $3.200 per month plus a piece rate of 40 cents per bundle inspected. His company accounts for inspection costs as manufacturing overhead. Because of a payroll department error in june. Robbie was paid $2400 plus a plece rate of 60 cents per bundle. He recelved gross wages totaling S3 360 : Rinte pobbies compensation has both paid $2400 plus a piece rate of 60 cents per bundle. He received gross wages totaling $3,360. Hint Alobbles compensation has both fuxed and variable components. Eriect on variable overhead spending varances Effect on fixed overhead budget variances 5. The materials purchasing manuger purchased 8.000 units of component k2x from a new source at a p rice $20 below the standard unit price of $200. These components turned out to be of extremely poor qualty with defects occurning at three times the standard rate of 6%. The higher rate of defects reduced the output of workers (who earn 512 per hour) from 20 units per hour to 16 units per hour on the units containing the discount components. Each finished unit contains one kax cornponent. To appease the workers fwho were irate at having to work with inferior componentst, the production manager agreed to pay the workers an additional $0.50 for each of the components (good and bodi) in the discount batch. Variable manulacturing overhead is applied at the rate of 56.00 per direct labor hour. The defective units aiso caused a 25 hour increase In fotal machine hours. The actual cost of electricity to run the machines is $2.00 per hour. Effect on materiats price variance s Effect on materials quantity variance 5 effect on labor fote variance 5 Effect on Lobor efficiency variances Efiect on variable cverhead spending wariances Effect an warlable ovethead efficiency varlance 5 Step by Step Solution
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