Maxine Watters, the Managerial Accountant, Has Been Asked by the President

question 88

Essay

Maxine Watters, the managerial accountant, has been asked by the President of Coolare Ceiling Fan Company to prepare an analysis of the effectiveness of the new management team. The company manufactures paper fans.
2020 standards:
Direct materials - 4 parts @ $2 per part
Direct labor - one half hour (0.5) @ $10 per hour
Estimated production - 100,000
Actual results 2020:
Direct materials - 585,000 parts at a total cost of $1,462,500 were purchased and used
Direct labor - 51,000 hours at a cost of $561,000
Actual production - 130,000 fans
Required:
Requirement: Compute the direct material and direct labor price and efficiency variances.

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Definitions:

Inference Rules

Rules that govern the logical steps allowing the deduction of conclusions from premises.

Means-end Analysis

A problem-solving strategy that involves breaking down problems into smaller, more manageable parts and addressing these to achieve a desired goal.

Incremental Steps

Small, progressive actions or changes made to gradually achieve a larger goal.

Systematic Test

A methodical approach to testing that follows a plan, guidelines, or set procedures to evaluate outcomes.