Do you agree that the excess unit cost is not of concern

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Landers Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.

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The production superintendent was pleased when he saw this report and commented: This $0.40 excess cost is well within the 2 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product. Actual production for the month was 12,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. 

Required: 

1. Compute the following variances for May:
a. Materials price and quantity variances. 
b. Labor rate and efficiency variances. 
c. Variable overhead rate and efficiency variances. 
2. How much of the $0.40 excess unit cost is traceable to each of the variances computed in (1) above. 
3. How much of the $0.40 excess unit cost is traceable to apparent inefficient use of labor time? 
4. Do you agree that the excess unit cost is not of concern?

Reference no: EM13962432

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