Elegant Designs is a manufacturer of large ower pots for urban settings. The company has these standards:

Direct materials (resin). . . . . . . . 13 pounds per pot at a cost of $4.00 per pound
Direct labor. . . . . . . . . . . . . . . . . . . . 2.0 hours at a cost of $24.00 per hour
Standard variable manufacturing overhead rate. . . . $2.00 per direct labor hour
Budgeted fixed manufacturing overhead. . . . . . . . $27,000
Standard fixed MOH rate. . . . . . . . . . . . . . . .$10.00 per direct labor hour (DLH)

Elegant Designs allocates fixed manufacturing overhead to production based on standard direct labor hours. Last month, Elegant Designs reported the following actual results for the production of 1,600 ower pots:

Direct materials. . . . . . . . . . . . . . . . . Purchased 21,100 pounds at a cost of
$4.40 per pound; Used 20,400 pounds to
produce 1,500 pots
Direct labor. . . . . . . . . . . . . . . . . . . . .Worked 2.5 hours per flower pot (3,750 total
DLH) at a cost of $20.00 per hour
Actual variable manufacturing-
overhead. . . . . . . . . . . . . . . . . . . . . . $2.40 per direct labor hour for total actual
variable manufacturing overhead
of $9,000
Actual fixed manufacturing overhead. . . . . . $26,400
Standard fixed manufacturing-
overhead allocated based on-
actual production. . . . . . . . . . . . . . . . . . . . . . $30,000

Calculate and interpret direct materials variances
Refer to the Elegant Designs data set.
1. Compute the direct material price variance and the direct material quantity variance.
2. Who is generally responsible for each variance?
3. Interpret the variances.

Material Price Variance= 8440 Unfavorable

Material Quantity (usage) Variance = 3600 Unfavorable

Explanation:

1. Material Price Variance=  Actual Quantity Purchased at Actual Price- Actual Quantity Purchased at Standard Price

Material Price Variance= (AQ xAP) -(AQ x SP)

Material Price Variance= 21,100 *4.40- 21,100*4

Material Price Variance=   92840 -84400= 8440 Unfavorable

Material Quantity (usage) Variance=Actual Quantity Used at Standard Price Less Standard Quantity Used at Standard Price

Material Quantity (usage) Variance= (AQ xSP) -(SQxSP)

Material Quantity (usage) Variance=20,400* 4- 19500*4= 81600-78000= 3600 Unfavorable

1500 pots require 13 standard resin per pound =  19,500

Actually 20,400 pounds are used for 1500 pots= 81,600    

2. Supervisors who often handle two thirds to three fourths of the dollar cost of the product are made directly responsible for the variances which show up as price or quantity variance etc.

Action to eliminate the causes of undesirable variances and to encourage and reward the desired performance lies in the field of management.                                        

3. These both variances are unfavorable meaning the actual costs are more than the calculated cost as by the standard.

in terms of experimental research, mcdonald’s charging different prices in the two cities relates to

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi