Bronze Brick Company Uses the Following Rule to Determine Whether

question 116

Essay

Bronze Brick Company uses the following rule to determine whether materials usage variances should be investigated:
A materials usage variance will be investigated when the variance is greater than either $5,000 or 12% of the standard cost.
During May,the company purchased and used 11,000 kg of concrete for $5 per kilogram.It was able to make 20,000 bricks.Its standard quantity of materials allowed is 0.50 kg of concrete per brick at a standard price of $6.50 per kilogram. A. Determine Bronze's material usage variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?

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Definitions:

Joint Costs

Costs incurred when producing multiple products simultaneously, which cannot be easily attributed to a single product.

Weight Factor

A factor assigned to each product in a joint manufacturing process representing its importance in comparison to the other products.

Support Department

A division within a company that provides essential services or backup to the production or operations departments, not directly producing goods or services.

Cost Accounting

A type of accounting focused on capturing a company's total cost of production by assessing its variable and fixed costs.