Business, 08.04.2021 18:40, garrismunoz
Universal Industries uses a standard cost system to monitor costs. For one of their best-selling products, they purchase both valves and fittings from outside vendors. Data for the most recent week related to this product are as follows:
Valve usage variance $22,200 unfavorable
Valve rate variance $1,000 unfavorable
Fitting usage variance $1,000 favorable
Fitting rate variance $6,000 favorable
Labor efficiency variance $18,000 favorable
Labor rate variance $9,000 favorable
Based on an analysis of the six variances from standard, which of the following management initiatives is indicated?
a. Request that the purchasing group substitute a less costly fitting.
b. Determine why salaries paid were higher than expected.
c. Implement a remedial training program to improve employee performance.
d. Review operations to determine the cause of excessive valve use.
Answers: 2
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