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chapter 9 handout

# chapter 9 handout - EXAMPLE 1 Acme Brick Company uses the...

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EXAMPLE 1 Acme Brick Company uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated when the variance is greater than either \$5,000 or 10 percent of the standard cost. During June, the company purchased 10,000 pounds of concrete for \$5 per pound. It was able to make 20,000 bricks. Its standard quantity of materials allowed is 0.45 pound of concrete per brick at a standard price of \$6 per pound. Required: A. Determine Acme’s material usage variance and whether it is favorable or unfavorable. Actual Input Quantity – SIQA)*SP 10,000- (.45 *20,000)= 1,000 *6= 6,000 B. Should the variance be investigated? Chapter 9 Handout

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yes EXAMPLE 2 Leeds Company uses the following rule to determine whether labor efficiency variances should be investigated: A labor efficiency variance will be investigated when the variance is greater than either \$100 or 10 percent of the standard cost.
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chapter 9 handout - EXAMPLE 1 Acme Brick Company uses the...

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