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Compute the total, price, and quantity variances for materials used and labor. Provide two possible explanations for each of the unfavorable variances calculated above, and suggest where responsibility for the unfavorable result might be placed.
The following direct materials and direct labor data pertain to the operations of Batista Manufacturing Company for the month of August.
Costs QuantitiesActual labor rate $13 per hour Actual hours incurred and used 4,250 hoursActual materials Actual quantity of materialsprice $128 per ton purchased and used 1,250 tonsStandardmaterials price $130 per ton Standard quantity ofmaterials used 1,200 tons
Instructions:
a. Compute the total, price, and quantity variances for materials used and labor.
b. Provide two possible explanations for each of the unfavorable variances calculated above, and suggest where responsibility for the unfavorable result might be placed.
Explain the components of bottom-up and top-down approaches to managing labor costs and decide which would be most important to use in either your current work environment or one with which you are familiar.
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