Power Company Has Been Unhappy with the Financial Accounting Variances

question 51

Essay

Power Company has been unhappy with the financial accounting variances that its cost accounting system has been producing,because its managers believe that there is more to evaluating an operation than just examining accounting numbers.Therefore,it has started gathering data to assist in the examination of nonfinancial results of operations.The following information relates to the manufacture of remote control units for televisions,radios,and stereo components:
$\begin{array}{lrr}&2011&2012\\\text { Remote control units produced and sold } & 80,000 & 100,000 \\\text { Direct manufacture labor-hours } & 12,000 & 13,200 \\\text { Direct materials used (sets) } & 80,600 & 100,500 \\\text { Direct manufacture cost per hour } & \$ 18 & \$ 20 \\\text { Direct materials cost per set } & \$ 31 & \$ 32\end{array}$ Required:
a.What is the partial productivity of direct materials for each year?
b.What is the partial productivity of direct manufacturing labor for each year?
c.Did each area improve between 2011 and 2012? Explain.
d.What will be the projected direct material and labor needs for 2013 if remote control units increase by 12,000 units,assuming Power Company applies the constant returns to scale technology?

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Definitions:

Sensorimotor Thought

A stage in cognitive development, according to Piaget, where infants interact with their environment through physical actions like sucking, grasping, and looking.

Tertiary Circular Reactions

describe a stage in Piaget's theory of cognitive development where infants (12-18 months) experiment with new behaviors to see the outcomes, demonstrating an early form of problem-solving.

Primary Circular Reactions

Early infantile behaviors that are repetitive and centered around the body, forming the basis for the development of more complex skills.

Simple Reflexes

Basic, involuntary motor responses to specific stimuli, evident in human behavior from an early age.