Bronze Brick Company Uses the Following Rule to Determine Whether

question 16

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.
Required:
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:

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, expressed as an annual rate.

Duration

A measure of the sensitivity of a bond's or fixed income portfolio's price to changes in interest rates, often used to manage interest rate risk.

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, specifically reflecting how much the duration changes for a 1% change in yield.

Macaulay Duration

A measure of the weighted average time until a bond or fixed income portfolio's cash flows are received, used to gauge interest rate sensitivity.