The management of Golding Company has determined that the cost to investigate a variance produced by its
Question:
Direct materials (8 lbs. @ $ 0.25) .......$ 2
Direct labor (0.4 hr. @ $ 7.50) ........ 3
Actual production for the past three months with the associated actual usage and costs for materials and labor follow. There were no beginning or ending raw materials inventories.
Required:
1. What upper and lower control limits would you use for materials variances? For labor variances?
2. Compute the materials and labor variances for April, May, and June. Identify those that would require investigation.
3. Let the horizontal axis be time and the vertical axis be variances measured as a percentage deviation from standard. Draw horizontal lines that identify upper and lower control limits. Plot the labor and material variances for April, May, and June. Prepare a separate graph for each type of variance. Explain how you would use these graphs (called control charts) to assist your analysis of variances.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
Question Posted: