SolarPrime, Inc. uses a standard- costing system to assist in the evaluation of operations. The company has
Question:
The company purchased and consumed 45,000 pounds of direct material at $ 7.70 per pound, and paid $ 16.25 per hour for 20,900 direct-labor hours of activity. Total completed production amounted to 9,500 units.
A review of the firm’s standard cost records found that each completed unit requires 4.2 pounds of direct material at $ 8.80 per pound and 2.6 direct- labor hours at $ 14 per hour.
Required:
1. On the basis of the information contained in the performance report, should SolarPrime’s management be concerned about its variances? Why?
2. Calculate the company’s direct- material variances and direct-labor variances.
3. On the basis of your answers to requirement (2), should SolarPrime’s management be concerned about its variances? Why?
4. Are things going as smoothly as the vice president believes? Evaluate the company’s variances and determine whether the change to a new supplier and Hoctor’s team- building/morale-boosting training exercises appear to be working. Explain.
5. Is it possible that some of the company’s current problems lie outside Hoctor’s area of responsibility? Explain.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt
Question Posted: