The Standards for One Carton of Flavor Rite Are

question 14

Essay

The standards for one carton of Flavor Rite are:
During the week ended May 17, the following activity took place:
• 4,800 lbs. of raw material were purchased for inventory at a cost of $5.60 per pound;
• 1,200 cartons of finished product were produced;
• 4,020 lbs. of raw material were used;
• 3,110 labor hours were worked at a total cost of $26,435.Calculate each of the following variances:
(a.) Raw materials purchase price variance.(b.) Raw materials usage variance.(c.) Direct labor rate variance.(d.) Direct labor efficiency variance.(e.) Explain the factors that most likely caused the variances computed above.

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Definitions:

Inventory

The goods and materials that a business holds for the ultimate goal of resale or repair.

Depreciation

The gradual decrease in the economic value of the capital stock of a firm, nation, or other entity, either through physical wear and tear or obsolescence.

Net Investment

The total amount of investment in new capital assets minus the depreciation on existing assets, indicating growth in an economy's productive capacity.

Inventory Investment

The change in the stock of goods held by a business for resale or production over a period, part of the investment component in GDP calculation.