Ryde company produces several chemical pesticide products for agricultural producers. Ryde offers farmers an extensive range...

  

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Ryde company produces several chemical pesticide products for agricultural producers. Ryde offers farmers an extensive range of premium products and expertise, and is committed to research and developing more sustainable and environmentally friendly solutions to protecting farmers' crops. You are employed at Ryde as a management accountant, and one of your key duties is to conduct an annual review of actual costs to budget. As part of this task, you are currently looking at Ryde's ProPowder product - a dust that can be used to kills and controls some of the major pests and diseases on tomatoes and vegetables. The following standard costs for the ProPowder product were set at the beginning of the last financial year. Direct materials (5 kgs @ $2.00 per kg) $10.00 $18.00 Direct labour (1.5 hrs @ $12.00 per hr). Actual outcomes for the ProPowder product were as follows: Units produced 50,000 @ Materials purchased and used Direct labour 245,000 kgs 90,000 hrs $2.20 per kg $14.50 per hr Required: (13 marks in total) (a) From the above information, compute the: (i) Direct materials price variance. (1 mark) Direct materials quantity variance. (1 mark) Direct labour rate variance. (1 mark) (iii) (iv) Direct labour efficiency variance. (1 mark) (b) The workers at Ryde Company are disgruntled with the standard hours set for direct labour. They believe that a direct labour standard of 1.5 hours per unit is unrealistic as it doesn't consider accepted stoppages to deal with problems in the production process. Management, however, believes standard will help to inspire improvement in production practices. (i) Identify and define the sort of standard management is setting for their staff. (2 marks) Identify one advantage and one disadvantage of management's approach to standard setting (as you identified in part (i)), with specific reference to the issues raised by both the workers and management (2 marks). (c) The Production Manager for the ProPowder product has complained that for two months in the past year, the Maintenance Division conducted unscheduled maintenance during the course of regular working hours. Consequently, workers had to work overtime to avoid a production backlog. (i) Identify the two variance calculations that this issue would most likely affect, explaining why these variances calculations will be affected. (3 marks) (ii) How should this information about unscheduled maintenance be taken into account when assessing variance analysis on the Production Manager's performance in managing the efficiency of his production staff? (2 marks) Ryde company produces several chemical pesticide products for agricultural producers. Ryde offers farmers an extensive range of premium products and expertise, and is committed to research and developing more sustainable and environmentally friendly solutions to protecting farmers' crops. You are employed at Ryde as a management accountant, and one of your key duties is to conduct an annual review of actual costs to budget. As part of this task, you are currently looking at Ryde's ProPowder product - a dust that can be used to kills and controls some of the major pests and diseases on tomatoes and vegetables. The following standard costs for the ProPowder product were set at the beginning of the last financial year. Direct materials (5 kgs @ $2.00 per kg) $10.00 $18.00 Direct labour (1.5 hrs @ $12.00 per hr). Actual outcomes for the ProPowder product were as follows: Units produced 50,000 @ Materials purchased and used Direct labour 245,000 kgs 90,000 hrs $2.20 per kg $14.50 per hr Required: (13 marks in total) (a) From the above information, compute the: (i) Direct materials price variance. (1 mark) Direct materials quantity variance. (1 mark) Direct labour rate variance. (1 mark) (iii) (iv) Direct labour efficiency variance. (1 mark) (b) The workers at Ryde Company are disgruntled with the standard hours set for direct labour. They believe that a direct labour standard of 1.5 hours per unit is unrealistic as it doesn't consider accepted stoppages to deal with problems in the production process. Management, however, believes standard will help to inspire improvement in production practices. (i) Identify and define the sort of standard management is setting for their staff. (2 marks) Identify one advantage and one disadvantage of management's approach to standard setting (as you identified in part (i)), with specific reference to the issues raised by both the workers and management (2 marks). (c) The Production Manager for the ProPowder product has complained that for two months in the past year, the Maintenance Division conducted unscheduled maintenance during the course of regular working hours. Consequently, workers had to work overtime to avoid a production backlog. (i) Identify the two variance calculations that this issue would most likely affect, explaining why these variances calculations will be affected. (3 marks) (ii) How should this information about unscheduled maintenance be taken into account when assessing variance analysis on the Production Manager's performance in managing the efficiency of his production staff? (2 marks)