Question

Carol Morgan manages the production division of Munoz Corporation. Ms. Morgan's responsibility report for the month of August follows: Budget Actual Variance Controllable costs Raw materials Labor Maintenance Supplies Total $18,720 11,660 3,500 2,450 $36,330 $22,320 16,940 5, 100 1,300 $45,660 $3,600 U 5, 280 U 1,600 U 1,150 F $9,330 U The budget had called for 3,600 pounds of raw materials at $5.20 per pound, and 3,600 pounds were used during August; however, the purchasing department paid $6.20 per pound for the materials. The wage rate used to establish the budget was $21.20 per hour. On August 1, however, it increased to $24.20 as the result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to use 100 hours of overtime at a $36.30 rate. The projected 550 hours of labor in the budget would have been sufficient had it not been for the 100 hours of overtime. In other words, 650 hours of labor were used in August.

Answer 1

Answer Pageno when confronted with the unfavorable variances in her responsibility report, Ms. Morgon argued that the orpost was unfair because it held her accountable for materials and laloor Variances that she did not control. → when the purchasing department işsusporlik to provide the Materials, components and Equipment required to keep. -The Paoduction porowe running {moothly at budget ed Porice. Human ore ſource departmene iş susponsible to provide labour force at sright time with budgeted Coat > The supplied Coşt is concern with sales Depart ment and maintenance Coşt is with poroduction Department. .: Mr Morgan I not correct

16 Pageno Material ulages variance (standardelegel - Actual logos Juegos de - ( 3600 - 3600 X 5.20 50 X 5.20 - None rate Laboor Efficiency variance = [standard ford - Actual hol]xstardoord ( 550-650)x21:20 (100)x21:20 = 21200) = maintenance Cost variance? = (Budgeted ($t - Actual . cost) (3500-5100) ( 1600 (0)