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Case Study S9-1

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Submitted By mspidell
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S9-1

The beef jerky would have to do research on how long it takes to make the product. They would need to know what temperature the meat would have to be for making the product. Beef jerky companies need to know the thickness of eat cut of jerky, along with how much to place in each bag.
A Beef Jerky company would use a measurement system to set a standard for how much jerky would be placed into each bag of product. They would also use time as a factor in setting standards for how long to make a product for and how much to place into each cooking area.
Direct Material Rates
If the beef jerky company has an unfavorable direct materials price variance it is because they paid more for the meat than what they expected to pay for it. In order for them to have a favorable direct materials usage variance their actual usage of materials would be less than the standard. An example is using less marinade for the beef than what they originally projected they would need to use. Having an unfavorable direct material spending variance could be caused by paying more for the products than what the company is actually using.
Direct Labor Rates
If the beef jerky company decided they needed to hire so many workers to produce the product, but completed the product with less than the amount determined they would have a favorable direct labor rate variance. However if they took longer than the set standard that would result in an unfavorable direct labor efficiency variance because they are not using the allotted time efficiently. The company hires the amount of employees but it takes them longer to package the product based on the standards set resulting in an unfavorable direct labor spending variance
Efficiency Variances
The beef jerky company hires less employees than projected trying to save costs and it takes them longer to produce the product is an example of unfavorable direct labor efficiency variance. If they had purchased supplies to clean the equipment after making the product and ran out when they were not supposed to they would have an unfavorable variable overhead efficiency variance.
Fixed Overhead Variances
The company spends less costs than what was expected results in a favorable fixed overhead spending variance. If they produce more bags of jerky than expected they will have a favorable fixed overhead volume.

Works Cited

Whitecotton, Stacey, Robert Libby, and Fred Phillips. Managerial Accounting. 2nd ed. N.p.: n.p., 2013. Print.

"How Its Made - Beef Jerky." YouTube. YouTube, 31 Aug. 2013. Web. 31 Oct. 2013.

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