Unit Variable Costs Member Firms for the Month Ended September 30, 2017 Firm A Industry Benchmark 2.15 oz. of glass $ 5.10 per oz. Firm B Firm C Firm D Materials input Materials price 2.15 2.00 2.20 2.60 $ 5.00 $ 5.25 $ 5.10 $ 4.50 Labor-hours used 0.75 1.00 0.65 0.70 0.70 hours Wage rate $14.50 $14.00 $14.25 $15.25 $12.50 per DLH $12.25 per DLH Variable overhead rate $ 9.25 $14.00 $ 7.75 $11.75 1. Calculate the total variable cost per unit for each firm in the trade association. Compute the percent of total for the material, labor, and variable overhead components. 2. Using the trade association's industry benchmark, calculate direct materials and direct manufacturing labor price and efficiency variances for the four firms. Calculate the percent over standard for each firm and each variance. Required 3. Write a brief memo to your boss outlining the advantages and disadvantages of belonging to this trade association for benchmarking purposes. Include a few ideas to improve productivity that you want your boss to take to the department heads' meeting.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Use of materials and manufacturing labor variances for benchmarking. You are a new junior accountant at In Focus Corporation, maker of lenses for eyeglasses. Your company sells generic-quality lenses for a moderate price. Your boss, the controller, has given you the latest month’s report for the lens trade association. This report includes information related to operations for your rm and three of your competitors within the trade association. The report also includes information related to the industry benchmark for each line item in the report. You do not know which rm is which, except that you know you are Firm A.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 8 images
