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
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
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.
See the attached file.
1. Explain who would be in the best position to assist in setting the following standards within an ...
Management tools used for decisions making and controls are discussed.