Blue Stripe is a company that designs, manufactures and sells a range of athletic shoes made using
Question:
Blue Stripe is a company that designs, manufactures and sells a range of athletic shoes made using natural and recycled materials. All shoes are hand finished to ensure high levels of quality.
The standard cost for a pair of training shoes is as follows:
INPUT COST
Rubber pelleis 0. 16 kg @ $15 per kg $2.40
Other materials $7.00
Labour 1.2 hours @ $22 per hour 26.40
Overheads $11.00
Total cost $46.80
It was budgeted that 64,500 pairs of shoes would be produced in December, but actual reduction was lower due to a machine breakdown and so only 62,000 pairs of shoes were actually produced, taking 68.200 labour
hours. The actual cost of rubber pellets in December was $168,000 and 9,600 kg were used to make the shoes, with no changes to the inventory of either raw materials or finished goods.
The world commodity prices for rubber pellets increased by 20% in the month of December. Al the beginning et the month, the design was changed to improve efficiency. The new design requires 5% less rubber pellets than previously It also resulted in workers having to adapt to the new designs
As a result of a new minimum wage introduced by the government, the rate of pay was increased te $24 per hour from the start of December. The actual labeur hours
worked in December was $1,705,000
a. Calculate the following variances for the month of December
(i) Material price planning and operational variances
(ii) Material usage planning and operational variances
(iii) Labour rate planning and operational variances
(iv) Labor efficiency planning and operational variances
The production manager is responsible for all attaches that lake place within the factory, including employing production staff, and has control over wage rale The purchasing manager is responsible for souring all raw materials and negotiating the right price. All planning and budgeting decisions are made by the senior management
team.
b. Assess the performance of the production manager, purchasing manager and the senior management team.
Expert Answer:
a i The material price planning variance is 2880 168000165120 and is unfavorable The ... View the full answer
