The Fallbrook Distributing Company Has a Soft Drink Bottling Plant

question 41

True/False

The Fallbrook Distributing Company has a soft drink bottling plant in Plano, Texas. Based on historical records, if its filling machine is working properly, the mean fill volume per can is 12.0 ounces with a standard deviation equal to 0.13 ounce. Further, the distribution of fill amounts is known to be normally distributed. The State of Texas has a department whose job it is to check on such consumer- related processes as soft drink filling. The idea is to protect the consumer. The department arrives at the Fallbrook plant once a month on an unscheduled day. When they arrive, they randomly select n = 4 cans and carefully measure the volume in each can. If any of these cans contains less than 11.85 ounces, the plant is shut down until a full inspection of the filling process is performed. Based on this information, the probability that the plant will get shut down if it is operating properly is approximately 0.1251.

Calculate and interpret overhead variances including volume, efficiency, and budget variances.

Describe the process of applying manufacturing overhead to products.

Understand the concepts of standard cost systems and their implementation in manufacturing environments.

Analyze the effects of manufacturing overhead variances on financial performance.