7-37. POSSIBLE CAUSES FOR PRICE AND EFFICIENCYVARIANCES. You have been invited to interview for an internship withan international food manufacturing company. When you arrive for theinterview, you are given the following information related to a fictitiouschocolatier for the month of June. The chocolatier manufactures trufflesin 12-piece boxes. The production is labor intensive, and the delicatenature of the chocolate requires a high degree of skill.ActualBoxes producedDirect materials used in productionActual direct material costActual direct manufacturing labor-hoursActual direct manufacturing labor costStandardsPurchase price of direct materialsDirect materials per boxWage rateBoxes per hour10,00013,000 pounds (lbs.)$78,0002,400$31,200$SA7 per pound0.90 pounds$ 15 per hour6Please respond to the following questions as if you were in an interviewsituation:Required1. Calculate the direct materials efficiency and price variances and thedirect manufacturing labor price and efficiency variances for themonth of June.2. Discuss some possible causes of the variances you have calculated.Can you make any possible connection between the material andlabor variances? What recommendations do you have for futureimprovement?

Direct material variance shows the difference between estimated per unit cost or material and actual…

IANCES. You have been invited to interview for an internship with an international food manufacturing company. When you arrive for the interview, you are given the following information related to a fictitious chocolatier for the month of June. The chocolatier manufactures truffles in 12-piece boxes. The production is labor intensive, and the delicate nature of the chocolate requires a high degree of skill.

IANCES. You have been invited to interview for an internship with an international food manufacturing company. When you arrive for the interview, you are given the following information related to a fictitious chocolatier for the month of June. The chocolatier manufactures truffles in 12-piece boxes. The production is labor intensive, and the delicate nature of the chocolate requires a high degree of skill.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Camptown Togs, Inc., a children's clothing manufacturer, has always found payroll processing to be…

A: Cost savings = $41,000Cost of system = $35,000Operating costs and taxes = $4,500Salvage value =…

Q: One of the operations in the Wonderland Post Office is a mechanical mail sorting operation. In this…

A: Labor rate variance = Actual hours*standard rate - standard hours*standard rate

Q: Greg has operated his shop for 2 years. He buys coffee from a local supplier and bakes the cinnamon…

A: Horizontal Analysis are prepared to compare the financial statements of the company over a specific…

Q: PT. Alakishia has been operating in Jakarta for more than 10 years. Aries is one of the employees…

A: Internal audit serves as an impartial and constructive assessment of an organization's operations,…

Q: As the production planner for Xiangling Hu Products, Inc., you have been given a bill of material…

A: A bill for the list of the raw materials needed in a stepwise manner is known as a bill of material…

Q: [The following information applies to the questions displayed below.] Ellery Products manufactures…

A: Cost Effectiveness -Cost effectiveness, which emphasizes output quality independent of resource…

Q: Sally works as a manager in the gardening section of her local Bunnings Store. Recently, Sally was…

Q: XCountry Train Inc. specializes in trans-American moves for businesses and individuals through the…

A: Break-even is the point at which the entity is in a situation of no profit and no loss. It is the…

Q: Usaha Maju is a garment company that produces family-run uniforms and various clothing. The company…

A: Ans. Usaha Maju is a family run garment company that located outside Tangerang, Tangsel, and…

Q: Ellery Products manufactures various components for the fabric from two vendors: Ewers Textiles and…

A: Costing decision-making:The costing decision-making refers to the cost accounting technique that is…

Q: Camptown Togs, Inc., a children's clothing manufacturer, has always found payroll processing to be…

A: Cash outflow year 0 = Initial cost of project Cash flow year 1-4 = Annual saving - Annual operating…

Q: Navern Corporation manufactures and sells custom home elevators. From the time an order is placed…

A: Manufacturing cycle efficiency:— It is the percentage of total manufacturing time used in…

Q: Crex Co was set up by Cynthia Rex who created her own brand of chalk paint 20 years ago. Using her…

A: Total material mix variance = Standard cost of the actual input materials if the standard mix had…

Q: Taylor Inc. produces summer dresses for women. Their dresses are made of cotton fabrics. The line…

A: The objective of the question is to identify which of the given costs is a mixed cost. A mixed cost…

Q: Laura's Cutting Station offers a new concept in haircuts; low cost and very quick. Set in a local…

A: The question is based on the concept of Cost Accounting. Variable cost remains same on per unit…

Q: Foto-Fast Copy Shop provides a variety of photocopying and printing services. On June 5, the owner…

A: Hi student Since there are multiple subparts, we will answer only first three subparts.

Q: Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other…

A: Budgets are the estimates or forecasts which are made for future period. Production budget shows how…

Q: Free Wheels has a plant that assembles bicycles. The plant currently has a small cafeteria for the…

A: The cooking equipment is in desperate need of repair. Besteats has given Free Wheels a contract to…

Q: What was the adverse labour efficiency planning variance for July? $86,400 © $77,760 $93,960 $97,200

A: Variance analysis and standard costing are the tools that managers use for determining performance…

Q: You are interviewing for an accountant position with Smith Industries. There are several candidates,…

A: A job costing system is a method of accounting used by the business that determines the cost…

Q: Taylor Inc. produces summer dresses for women. Their dresses are made of cotton fabrics. The line…

A: The objective of the question is to identify which of the given costs should be classified as a…

Question

7-37. POSSIBLE CAUSES FOR PRICE AND EFFICIENCY
VARIANCES. You have been invited to interview for an internship with
an international food manufacturing company. When you arrive for the
interview, you are given the following information related to a fictitious
chocolatier for the month of June. The chocolatier manufactures truffles
in 12-piece boxes. The production is labor intensive, and the delicate
nature of the chocolate requires a high degree of skill.
Actual
Boxes produced
Direct materials used in production
Actual direct material cost
Actual direct manufacturing labor-hours
Actual direct manufacturing labor cost
Standards
Purchase price of direct materials
Direct materials per box
Wage rate
Boxes per hour
10,000
13,000 pounds (lbs.)
$78,000
2,400
$31,200
$
SA
7 per pound
0.90 pounds
$ 15 per hour
6
Please respond to the following questions as if you were in an interview
situation:
Required
1. Calculate the direct materials efficiency and price variances and the
direct manufacturing labor price and efficiency variances for the
month of June.
2. Discuss some possible causes of the variances you have calculated.
Can you make any possible connection between the material and
labor variances? What recommendations do you have for future
improvement?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction:

VIEW

Step 2: Computation of price and efficiency variance:

VIEW

Step 3: 2. Causes of the variances

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Sharon's Cutting Station offers a new concept in haircuts; low cost and very quick. Set in a local mall, Sharon's offers 15-minute haircuts for harried shoppers who do not have time for lengthy appointments. To ensure that the clients are in and out quickly, she schedules her 5 employees based on expected client traffic. Each of the employees is paid $1220 per month, with part of their pay coming from client tips. Sharon pays rent and overhead costs of $2400 per month on the facility. Because of the quick nature of the service, Sharon doesn't have time to clean combs in between clients, so she uses a new comb for each customer, at a cost of $0.60 each. She also provides shampoo and conditioner for each client at a cost of $1.05 per client. The average price for a haircut is $15. Sharon pays herself $5600 per month. What is Sharon's contribution margin ratio? 89.0% 85.8% O 12.0% O 11.0%
st K Yard Growers Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data conceming the decision are (Click the icon to view the data.) Read the requirements Requirement 1. Should Yard Growers Corp manufacture the 680,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain The cost of manufacturing 680,000 garden tools in the Maryland facility is 680,000 garden tools from the Taiwan supplier is and the cost of purchasing Yard Growers Corp purchase the garden tools from the Talwan supplier because it is than the relevant costs to manufacture the garden tools in Maryland SKIP REQUIREMENT 2 Requirement 3. What are some of the qualitative factors…
None
Determine the company's total cost of goods completed and COGS in December. Total cost of goods completed and COGS 69 eTextbook and Media Save for Later Attempts: 0 of 2 used Submit Answer (d1) How much gross margin did the company earn in December? (Round percentage answer to 2 decimal places, e.g. 52.75%.) Gross margin Gross margin percentage $ % If Betty had a goal of earning a 35% gross margin, did she reach her goal? .she eTextbook and Media Save for Later ✓ reach her goal, because % is than her goal of 35%. Attempts: 0 of 2 used Submit Answer
Carmel Company has a frequent buyer program for its customers, where the customers can attain an "elite" level based on the number of orders and the total revenue of the orders. There are twoelite levels: Platinum and Titanium. The benefits of elite membership include discounts and access to special customer service representatives who can resolve problems. The company has one full time customer representative per 200 Titanium customers and one full-time customer representa tive per 2,000 Platinum customers. Customer representatives receive salaries plus bonuses of 2 percent of customer gross margin. Carmel spends 70 percent of its promotion costs on Titanium customers to encourage their loyalty
Please show work and explanations on how you got your answers.