Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Spinal Contour is a manufacturer of high-quality products designed to help support healthy backs and spines. Their newest product offering is a massage chair. Below

Spinal Contour is a manufacturer of high-quality products designed to help support healthy backs and spines. Their newest product offering is a massage chair. Below is the standard cost structure for the chair:

Standard Cost Sheet: Massage Chair

Metal tubing

5 meters @ $3.50

$17.50

Leather

3 square meters @ $5.00

$15.00

Padding

4 kilograms @$3.50

$14.00

Direct labor

3 hours @ $15

$45.00

Total standard cost

$91.50

This month, Spinal Contour manufactured 500 massage chairs. The following costs were incurred:

Actual Costs Incurred for the Month: Massage Chair

Metal tubing

2,600 meters

$9,360

Leather

1,400 square meters

$7,700

Padding

1,900 kilograms

$6,560

Direct Labor

1,400 hours

$21,140

Total cost

$44,850

Suppose you are the senior controller for Spinal Contour and you plan to perform a variance analysis of the massage chairs manufactured to determine if the standards are being met. Once you have completed the analysis, you plan to show it to the production department manager and ask for an explanation of any variances that you believe should be examined.

The Assignment:

  • Part 1: Calculate all materials and labor variances in a spreadsheet by using a program like Excel. Be sure to include price, quantity, wage rate, and labor efficiency variances.
  • Part 2: Prepare a memo to your subordinate, using a program like Word.
    • Summarize and analyze the actual costs in relation to the standard costs incurred for the month.
    • Ask for clarification of any variances that need to be investigated.

Be sure to include whether alternatives exist for the future of the organization and explain how the results of the variance analysis might influence those alternatives.


Step by Step Solution

3.41 Rating (157 Votes )

There are 3 Steps involved in it

Step: 1

ANSWER A Material Price Variance Actual Qty x Standard Price Actual Price Material Quantity Variance ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Transport Operations

Authors: Allen Stuart

2nd Edition

978-0470115398, 0470115394

More Books

Students also viewed these General Management questions