Accounting 3300 on Variance Analysis

Required: 1. Compute the amounts in a spreadsheet that clearly shows your work. (Tip: Use the variances to work backwards from Standard Quantity and Standard Hours). Supplemental Problem on Variance Analysis 2. Prepare a one-page formal memorandum (12-point font, 1-inch margins, single-spaced, appropriate elements in the header (date, from, subject, and to)) to the Plant Manager that clearly and concisely describes the purpose of variance analysis with an example that explains a possible cause of one of the variances on the spreadsheet. Attach the spreadsheet to the memorandum. Objectives: 1. To correctly compute direct and indirect cost variances 2. To develop your communication ability by describing the purpose of variance analysis with an example. Mahonri Company produces a single product, Stuff. It uses a standard costing system for both its two direct costs (direct materials and direct manufacturing labor) and its manufacturing overhead costs. In an informal conversation with the Plant Manager, Nephi Jones confesses that he does not understand variance analysis and how it can be used to improve the profitability of the production processes. He has provided the following standard cost data for one unit of the product and a table providing recent cost variances and other information for the month. Fixed manufacturing costs are budgeted to be $400,000. Selected actual results and variances are: Required: 1. Compute the amounts in a spreadsheet that clearly shows your work. (Tip: Use the variances to work backwards from Standard Quantity and Standard Hours). Supplemental Problem on Variance Analysis 2. Prepare a one-page formal memorandum (12-point font, 1-inch margins, single-spaced, appropriate elements in the header (date, from, subject, and to)) to the Plant Manager that clearly and concisely describes the purpose of variance analysis with an example that explains a possible cause of one of the variances on the spreadsheet. Attach the spreadsheet to the memorandum. Objectives: 1. To correctly compute direct and indirect cost variances 2. To develop your communication ability by describing the purpose of variance analysis with an example. Mahonri Company produces a single product, Stuff. It uses a standard costing system for both its two direct costs (direct materials and direct manufacturing labor) and its manufacturing overhead costs. In an informal conversation with the Plant Manager, Nephi Jones confesses that he does not understand variance analysis and how it can be used to improve the profitability of the production processes. He has provided the following standard cost data for one unit of the product and a table providing recent cost variances and other information for the month. Fixed manufacturing costs are budgeted to be $400,000. Selected actual results and variances are