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exam_patel - Robert Morris University ACC510 Assessment...

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Robert Morris University ACC510 Assessment Exam (Live Text) 2. In memo format: a. Summarize the variances that you have computed in (1.) above by showing the net overall favorable or unfavorable variance for the month. Price Variance Total Variance F or U Direct Material $ 8,910 U Direct Labor $ (1,080) F Overhead based on m/c hrs $ 720 U Total Price Variance $ 8,550 U Quality Variance Total Variance F or U Direct Material $ (500) F Direct Labor $ 5,400 U Overhead based on m/c hrs $ 600 U Total Quality Variance $ 5,500 U Total Variance $ 14,050 U b. What impact did this variance have on the income statement? Variances measure the difference between standard and actual costs. We can see that quality variance for direct labor and overhead based on machine hours are more than standard hours. Price variance for the direct material and overhead cost is more than standard hours. Hence, the expenses increased with less quantity and more labor hours and more overhead machine hours. But the sales remain same and thus profit margin of the firm decreases. Actual
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This note was uploaded on 11/17/2010 for the course MBA ACC 510 taught by Professor Knutsen during the Spring '10 term at RMU.

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exam_patel - Robert Morris University ACC510 Assessment...

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