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.© BrainMass Inc. brainmass.com August 19, 2018, 1:59 am ad1c9bdddf
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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.