McGrew_MBA733 Week 5 Discussion Issues

McGrew_MBA733 Week 5 Discussion Issues - Trish McGrew MBA...

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Trish McGrew MBA 733, Prof. Bowsher, Week 5 Discussion Issues, February 2, 2011 a. “My advice is to always pick up any special offer of irregular materials from your supplier. The only place you’ll take a hit is on the direct materials usage variance; because you’ll have more scrap. But you’ll always make it up on the materials price variance.” This is not a good suggestion unless the irregular materials will be used quickly. According to text (Anthony, Hawkins, & Merchant, 2011 p 610), investigation of a favorable price variance may reveal that substandard quality material bought at a discount price caused abnormal spoilage in productions operations, as reflected in an unfavorable usage variance. The text further states that in this case, the price variance is not favorable in any literal sense, and the purchasing department, not production departments, has caused the usage variance. b. “In our company, every department is treated as a profit center. You can’t really effectively evaluate a responsibility center unless you actually assign some revenues to
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This note was uploaded on 03/11/2011 for the course MBA 733 taught by Professor Prof.bowsher during the Spring '11 term at Franklin.

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McGrew_MBA733 Week 5 Discussion Issues - Trish McGrew MBA...

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