The Following Events Occurred at Crescent Manufacturing (CM), an Assembler

question 16

Essay

The following events occurred at Crescent Manufacturing (CM), an assembler of engine parts, during May:
1. Because of a stock shortage at its regular supplier, CM had to rely on a new vendor for two purchases of raw material parts. The vendor required CM to pay air-freight charges; however, upon arrival, the company found the goods to be above-average in quality.
2. The local municipality raised its property tax rates by 2%.
3. A flu outbreak on the assembly line forced management to use more experienced, senior personnel to complete production orders on a timely basis. These workers more than made up for lost time.
4. A shoddy maintenance program resulted in an abnormally high number of breakdowns on machine no. 76 and slowed production.
5. The implementation of a new program had positive effects for the company with respect to material usage and worker productivity.
Required:
Create a table with the following headings: material price variance, material quantity variance, labor rate variance, and labor efficiency variance. Determine which of these variances would be affected by the individual events and whether the variance would be favorable or unfavorable.

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Definitions:

Customers

Individuals or entities that purchase goods or services from a business, playing a central role in any company's success.

Sustainability

The practice of maintaining processes or systems in a way that doesn't deplete the natural resources or harm the environment for future generations.

Environmentally Conscious

Awareness and consideration of environmental impacts in decision making, often involving efforts to reduce negative effects on the environment.

Supply Chain Performance

An evaluation of how effectively and efficiently a supply chain meets its objectives, often measured by metrics such as delivery time, quality, and cost.