Kara Stacey manages the production division of Adam Corporation. Ms. Stacey\'s r

Question

Kara Stacey manages the production division of Adam Corporation. Ms. Stacey's responsibility report for the month of August follows. Budget Actual Variance Controllable costs 4,200 U 5,070 U Raw materials $ 19,740 $23,940 Labor Maintenance Supplies 10,890 15,960 5,00 U 3,4005,1001,700 U 2,400 1,150 250 F Total $36,430$46,150 9,720 U The budget had called for 4,200 pounds of raw materials at $4.70 per pound, and 4,200 pounds were rate used to establish the budget was $19.80 per hour. On August 1, however, it increased to $22.80 as the used during August; however, the purchasing department paid $5.70 per pound for the materials. The wage result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Stacey to use 100 hours of overtime at a $34.20 rate. The projected 550 hours of labor in the budget would have been suficient had it not been for the 100 hours of overtime. In other words, 650 hours of labor were used in August. of overtlime. In other words, 650 hours of labor were used in Required a. When confronted with the unfavorable variances in her responsibility report, Ms. Stacey argued that the t was unfair because it held her accountable for materials and labor variances that she did not control. Is she correct? o Correct Incorrect b. Calculate the variances of the items Ms. Stacey controlled during the period. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e.. zero variance).) Variances

Explanation / Answer

If the purchasing departement would have purchase the material at 4.70 per pound

As the labor price increase which is not the mistake of Kara, also the additional 100 hours used was because of material was not provided

Budget Actual Variance Raw material            19,740            23,940                      -   Labor            10,890            10,890                      -   Maintenance               3,400               5,100               1,700 U Supplies               2,400               1,150            (1,250) F                  450 U

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