The Accountants at Value Vases Developed the Following Standards for Producing

question 22

Essay

The accountants at Value Vases developed the following standards for producing exquisite vases from a liquid silicate:
Direct materials 2.5 litres @ $5 per litre
Direct labour 3.5 hours @ $15 per hour
Variable overhead $10.00 per direct labour hour
Fixed overhead $5.00 per direct labour hour
Value's volume of direct labour hours for normal costing is 1,680 each month. In a recent month, Value produced 500 vases and incurred the following costs:
Direct materials purchased & used 1,200 litres @ $6 per litre
Direct labour 1,700 hours @ $14 per hour
Variable overhead $15,000
Fixed overhead $8,500
a)Calculate the following eight variances:
Direct material price variance
Direct material efficiency variance
Direct labour price variance
Direct labour efficiency variance
Variable overhead spending variance
Variable overhead efficiency variance
Fixed overhead spending variance
Fixed overhead production volume variance
b)Suggest one possible cause for each of the following variances calculated in part (a):
Direct material price variance
Direct labour efficiency variance
Fixed overhead spending variance

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Definitions:

Organizational Context

The combination of internal and external factors, including culture, structure, and the external environment, that influence how an organization operates.

HRM Practices

The various strategies, policies, and practices implemented by an organization to effectively manage its human resources.

Best Practice

Best practice involves the processes, techniques, or methodologies that are recognized as the most efficient and effective way to achieve a desired outcome based on industry standards or proven success.

Fit

The degree of alignment or compatibility between two or more entities, such as a job candidate and corporate culture.