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Beta Company

In: Business and Management

Submitted By LagNoemi
Words 846
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WRITTEN ANALYSIS OF THE CASE
BETA COMPANY

SYNOPSIS

Beta Company produces two Product A and B and standard costs of each product were predetermined by management. During November actual production for Product A was 4,200 units while Product B was 3,600 units. For material X, 39,000 pounds were purchased at $14.40 and for material Y, 11,000 pounds were purchased at $9.70. Variance analysis for actual cost versus standard cost should be prepared for the said month to be able to measure results of operations, which may be the basis in making a decision on whether to maintain the present performance if the result is satisfactory, or take the necessary corrective action if material differences are reported.

OBJECTIVES

To be able to compute variances of actual costs against standard cost of November Production of products A and B of Beta Company and to be able to analyze results and assess performance of departments specifically that of Purchasing and Production.
PROBLEM
1. Calculate the material price and usage variances for the month.
2. Calculate the labor rate and efficiency variances for the month.
3. How would your answers to Question 1 and 2 change if you had been told that November’s planned production activity was 4,000 units of A and 4,000 units of B?
4. How would your answers to Question 1 and 2 change if you had been told that November’s sales were 4,000 units of A and 3,500 units of B?

CONSIDERATIONS/FACTS:
Pre-determined standard cost Material X Material Y Direct Labor
Product A 4 lbs @ $15 1 lb @ $9.50 1/5hr @ $18
Product B 6 lbs @ $15 2 lbs @ $9.50 1/3hr @ $18

November Actual Production

Product A 4,200 units
Product B 3,600 units

Actual Purchases of Materials

Qty in lbs Price in $
Material X 39,000 14.40
Material Y 11,000 9.70

Required Direct Labor: 2025...

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