Question

The Mighty Morphs produces two popular games, “Powerful Puffs” (PP) and “Mini-Mite Morphs” (MMM). Following are standard costs:


The standards call for more than one disk and documentation book per unit because of normal waste due to faulty DVDs and poor binding.
Actual costs for last week follow:
DVDs purchased (@ $0.39) ........... $780
DVDs used ................. 2,025
Powerful Puffs games produced ......... 1,000
Powerful Puffs documentation printed (@ $2.95) ... $4,425
Powerful Puffs documentation used ......... 1,005
Mini-Mite Morphs games produced ......... 800
Mini-Mite Morphs documentation printed (@ $4.75) .. $4,750
Mini-Mite Morphs documentation used ........ 825
Assembly labor cost (55 hrs) ............ $795
Management decided that it would require too much effort to keep track of how many DVDs and hours are used for each of the games separately. Accordingly, the DVD materials and labor variances are combined rather than computed separately for each game. The price variances are recorded at the time of purchase.

REQUIRED
A. What is the documentation price variance for MMM?
B. What is the efficiency variance for DVDs?
C. What is the sum of all variances for assembly labor for both games?
D. Calculate last week’s estimated cost of waste for DVDs and documentation.
E. Discuss the pros and cons of building waste into thestandards.


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  • CreatedJanuary 26, 2015
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