Solution-Calculate all cost variances for direct materials

Calculate all cost variances for direct materials

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Reference no: EM132548703

The production manager of Pippin Company exercises management by exception by reviewing materials usage and labor efficiency variances incurred during any given week. His decision rule is that any variance that is at least $5,000 or at least 10% of standard cost whichever is smaller, should be investigated to determine the underlying cause.

During last week, the company's operating performance included the following.

Units produced: 5,000

Direct material used: (21,600 lbs @ $18.20)

Direct Labor hours worked: (8,300 hours@ $12.30)

Standard cost specifications for each unit produced are:

Direct materials: 4lb at $18.00 each

Direct labor: 1.6 hours @ $12.30 each

Required:

Question A. Calculate all cost variances for direct materials and direct labor

Question B. Should the production department manager investigate either of the variances for which he is responsible?

Reference no: EM132548703

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Calculate all cost variances for direct materials

Reference no: EM132548703

Reference no: EM132548703

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