Chapter 14 Case - Based on Self Study #2 You have been assigned to work with, Jessica, the Plant Superintendent at Chemical Inc. Specifically, you are looking control over the direct costs for the unit that manufactures the Weed-Be-Doom product. They use a standard costs system. The standard material costs for a bag of Weed-Be-Doom is $2.00. That is made up of 25 pounds of XF-2000 at a cost of $0.08 per pound. The direct labor cost is $1.60 per bag. That cost is made up of .05 hours at a rate of $32 per hour. During the month of March, the Matthew, the manager of Weed-Be-Doom production line was given a budget of $432,000 to produce a 120,000 bags of the product. The Matthew is very happy that the actual cost for the month was $384,500 as savings of $47,500. The Matthew reported the savings as reasonable because production had only been for 100,000 bags during the month. In looking at this further you found that the Department used 2,700,000 pounds of XF- 2000 for a price of $0.075 per pound. You also found that they used 5,200 hours of labor for a total cost of $182,000. The challenge now is to dig into the details, break- down the details for Matthew so that the team can understand the savings. Please prepare a report for Matthew about the Weed-Be-Doom, which is a cost center. You have set up a meeting with him to go over the direct material variances. (They will talk about the direct labor variances another time.) In order to be prepared for the meeting you will need to include the following Direct Material Variances: Total Budget Variance, Master Budget Variance (also known as the Sales Volume Variance), Flexible Budget Variance, DM Quantity Variance, and DM Price Variance. The team is looking forward to your clear explanations and suggestions.