You are a student preparing for a job interview with a fortune 100 consumer prod
ID: 2374710 • Letter: Y
Question
You are a student preparing for a job interview with a fortune 100 consumer products manufacturer. You are applying for a job in the finance department.
Calculate the materials efficiency and price variance, and the wage and labor efficiency variance for the month of May.
Price Variance = (Actual Price of Input %u2013 Budgeted price of Input) x Actual Quantity of Input
Efficiency Variance= (Actual quantity of input used %u2013 Budgeted quantity of input allowed for actual output) x Budgeted price of input
You are a student preparing for a job interview with a Fortune 100 consumer products manufacturer. You are applying for a job in the Finance Department. This company is known for its rigorous case-based interview process. One of the students who successfully obtained a job with them upon graduation last year advised you to"know your variances cold!When you inquired further, she told you that she had been asked to pretend that she was investigating wage and materials variances. Per her advice, you have been studying the causes and consequences of variances. You are excited when you walk in and find that the first case deals with variance analysis. You are given the following data for May for a detergent bottling plant located in Mexico:
Actual
Bottles filled 340,000
Direct materials used in production 6,150,000 ozs
Actual direct material cost 2,275,000 pesos
Actual direct manufacturing labor-hours 26000 hours
Actual direct manufacturing labor-hours 784,420 pesos
Standards
Purchase price of direct materials 0.36 pesos / oz
Bottle size 15 oz
Wage rate 29.25 pesos / hour
Bottles per minute 0.50
1. Calculate the materials efficiency and price variance, and the wage and labor efficiency variances for the month of May.
Explanation / Answer
Stnd Matl = 10 sq yds x 1500 = 15,000 yds x $5 = 75,000 Actual Matl = 14,000 yds x $4.90 = 68,600 Total Matl Var = 6,400 Favorable Matl Usage - 1,000 yds Fav x $5 = 5,000 Fav Matl Price - 14,000 x $.10 = 1,400 Fav Stnd Labor = 5 hrs x 1500 = 7,500 Std Hrs x $10 = 75,000 Actual Labor = 7600 hrs x 10.50 = 79,800 Total Labor Var = 4,800 Unfav Labor Efficiency - 100 hrs x $10 = 1000 Unfav Labor Rate - $.50 x 7600 = 3800 Unfav
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