Explore BrainMass

Direct Labor and Materials Costs for Anthony's Orchards

It's important that managers understand how costs are reported on the company's financial statements. Review the financial data for Anthony's Orchards for the current year and compare the direct labor costs and direct materials to the previous year.

Write a memo to senior management analyzing your findings and provide a recommendation for next year. What would you change based upon your analysis?

To prepare for your memo, use data from the Anthony's Orchards website and compare and contrast the direct labor costs and direct materials.

A description of your recommendation, a rationale for why it is important, and a description of the consequences of not following the recommendation should be included in the memo.

Solution Preview

Please see the attached file(s) for the complete tutorial in proper format.

To: Senior Management
Anthony Orchards
From: [Name]
Anthony Orchards
Subject: Direct Labor and Material Cost Analysis for 2011 and 2010

Good news is that in spite of the increased production - 190,000 from 179,000 cases - in 2011, which represents a 6.15% improvement, the company's total direct labor costs actually decreases by 12.66% to $908,010 (Please refer to Exhibit 2). This improvement is in spite of the increased rate for every direct labor hour from $8.80 to $8.85. The savings in total direct labor cost is a result of improvements in the direct labor hour spent for 1) inspection, washing, peeling, coring; 2) saucing, and 3) dicing.
On the other hand, the company's total direct material costs pertaining to its Prepared Apple products climbed 6.94% as compared to the increase in the total number of cases which was only 6.15% as seen in Exhibit 3. This higher increase in the materials costs is attributed to the significant increase of $20.99 or ...

Solution Summary

Direct labor and materials costs for Anthony's Orchards are examined.