Explore BrainMass

Explore BrainMass

    Budgeting is a usuful management tool used for decision making and control

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Budgeting is a useful management tool used for decision making and control. Therefore, Quicksand Company has set the following standards for one unit of products:

    Direct materials 50 yards x $3 = $150
    Direct labor 10 hours x 18= 180
    total 330

    The following information pertains to September:

    Actual complete production: 1,200 units
    Direct material purchased: 70,000 yards at $3.25, or $227,500
    Direct material used: 62,400 yards
    Direct labor: 11,900 hours at $18.30 per hour, or $217,770

    Required:

    1. Explain who would be in the best position to assist in setting the following standards within an organization and why:

    a. direct-material price standard
    b. direct-material quantity (efficiency) standard
    c. direct-labor rate standard
    d. direct-labor efficiency standard

    2. Calculate the direct-material price and quantity (efficiency) variances, and the direct-labor rate and efficiency variances. Explain why each variance is favorable or unfavorable.

    3. Describe some of the drawbacks of using the operating budget as a control device.

    © BrainMass Inc. brainmass.com June 4, 2020, 4:24 am ad1c9bdddf
    https://brainmass.com/business/accounting/management-tool-used-decision-making-control-559836

    Solution Preview

    See the attached file.

    Required:

    1. Explain who would be in the best position to assist in setting the following standards within an ...

    Solution Summary

    Management tools used for decisions making and controls are discussed.

    $2.19

    ADVERTISEMENT