Question #1 Supplier Actual Price Standard Price Actual Quantity Standard Quantity Material Price Var Material Usage Var Total Variance Current $7.50 $7.50 25,000 24,240 $0 Alternative #1 $7.35 $7.50 25,500 24,240 $0 Alternative #2 $7.58 $7.50 24,400 24,240 $0 Standard Quantity is 2.02 components Quantity produced is 12,000 You are a plant manager and have been approached by your purchasing manager about swapping out one of your suppliers. The manager has identified a vendor who will supply a key component at a 2% discount to your current supplier. At the same time, the supervisor of the group approaches you to indicate that the current supplier is not consistently meeting tolerances. The supervisor suggests a second vendor who promises better quality. You decide to run three batches, each with a different component. Results are in the table above. Task 1 Calculate the Material Price Variance for each component. Task 2 Calculate the Material Usage Variance for each component. Task 3 Based on the experiment, which vendor would you select?
Question #1
Supplier Actual Price Standard Price Actual Quantity Standard Quantity Material Price Var Material Usage Var Total Variance
Current $7.50 $7.50 25,000 24,240 $0
Alternative #1 $7.35 $7.50 25,500 24,240 $0
Alternative #2 $7.58 $7.50 24,400 24,240 $0
Standard Quantity is 2.02 components
Quantity produced is 12,000
You are a plant manager and have been approached by your purchasing manager
about swapping out one of your suppliers. The manager has identified a vendor
who will supply a key component at a 2% discount to your current supplier.
At the same time, the supervisor of the group approaches you to indicate that
the current supplier is not consistently meeting tolerances. The supervisor
suggests a second vendor who promises better quality.
You decide to run three batches, each with a different component. Results are in the table above.
Task 1 Calculate the Material Price Variance for each component.
Task 2 Calculate the Material Usage Variance for each component.
Task 3 Based on the experiment, which vendor would you select?
Question #2
From the book. Problem 5-57 (p268), tasks 1 - 3. Skip task 4.
Question #3
From the book. Brief Exercises 9-21 through 9-25. Complete all tasks for each.
This is a series of related questions that start with a sales budget
and runs through an overhead budget.
Variance analysis is the evaluation of the variation between the actual figures and the budgeted figures in a company. This analysis helps to estimate the future possible performance of the entity. Proper analysis can help to get rid of negative factors in the production process, so as to increase the productivity. The variances can be favorable or adverse. A favorable variance is when the Actual costs are less than the budgeted costs. When the opposite happens, the variance is said to be adverse.
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