Materials quantity variance material price variance

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Materials Quantity Variance Material Price Variance Actual usage 3,300 lbs. Actual cost $12,600 Standard usage 3,000 lbs. Standard cost 12,000 Unfavorable 300 lbs. Unfavorable $600 Bob Sterling, the production supervisor, has received a memorandum from his boss stating that he did not meet the established standards for material prices and quantity and corrective action should be taken. Sterling is very unhappy about the situation and is preparing to reply to the memorandum explaining the reasons for his dissatisfaction. All of the following are valid reasons for Sterling’s dissatisfaction except that the a. material price variance is the responsibility of the purchasing department. b. cause of the unfavorable material usage variance was the acquisition of substandard material. c. standards have not been adjusted to the engineering changes. d. variance calculations fail to properly reflect that actual production exceeded normal production capacity.
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58 148. CSO: 1C1e LOS: 1C1s During the month of May, Tyler Company experienced a significant unfavorable material efficiency variance in the production of its single product at one of Tyler’s plants. Which one of the following reasons would be least likely to explain why the unfavorable variance arose? a. Inferior materials were purchased. b. Actual production was lower than planned production. c. Workers used were less-skilled than expected. d. Replacement production equipment had just been installed. 149. CSO: 1C2a LOS: 1C2a Sara Bellows, manager of the telecommunication sales team, has the following department budget. Billings - long distance $350,000 Billings - phone card 75,000 Billings - toll free 265,000 Her responsibility center is best described as a a. cost center. b. revenue center. c. profit center. d. investment center. 150. CSO: 1C2a LOS: 1C2b The production manager of the Super T-shirt Company is responsible for the activity of her department and the costs associated with production. Super T adheres to a responsibility centered budget process, and the manager’s performance is measured by how well she performs to budget. Recently, the dark horse team won the local college basketball tournament. As a result, the sales department, which operates as a profit center, received an order for 10,000 t-shirts, but only if they could be delivered in three days. The production manager said she could meet the schedule, but only by incurring overtime pay that would cause her to be over budget for hourly wages paid. What would be the best course of action for the sales department and the production manager to undertake in this case? a. Accept the order and overrun the production manager’s budget. b. Refuse the overtime and produce only what the production department is capable of while staying within the budget. c. Accept the order and ignore the effect on the production department budget when conducting the performance review.
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