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Please show all workings Camp Company manufactures only one product, a small camping stove called LightStove. The company uses a standard cost system and has
Please show all workings
Camp Company manufactures only one product, a small camping stove called "LightStove". The company uses a standard cost system and has established the following standards per unit of LightStove; Standard Quantity 2.6 Standard Price $12.60 $15.30 Standard Cost $32.76 $19.89 Direct materials Direct labour Ibs. hrs. /1b /hr 1.3 During November, the company produced a total of 8,300 units. The company keeps a small amount of raw materials in inventory. For the month of November, they started the month with 800 pounds of raw materials inventory and ended the month with no raw materials on hand. The payroll departments reported that the 38 employees worked an average of 170 hours each during the month. In November, the company changed the mix of employees it used in the production department and the average wage rate for the month was $14.90 per hour. The standards listed above are based on the previous mix of labour During the month the company purchased 21,000 pounds of materials from a new vendor for a cost of $230,000. The new supplier would like to enter a long-term contract with Camp Company. The company's management wishes to determine the efficiency of the activities related to the production of LightStove. Required: a) Calculate the materials price variance and the material quantity variances. Be sure to show your work b) Based on your calculations, would you recommend that Camp Company sign a long- term contract with the new supplier? Explain why. Name two other non-quantitative factors should they consider regarding the long-term contract. c) Calculate the labour rate variance and labour efficiency variance. Be sure to show your work. d) Would you recommend that Camp Company continue the new labour mix that it tried in November? Explain why|Step by Step Solution
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