7) (10 points) Complete the Budget Report provided below, calculating all varian

Question

7) (10 points) Complete the Budget Report provided below, calculating all variance amounts and indicated "F" if the variance is favorable or "U" if it was unfavorable. If you are familiar with excel, you can download this form in excel on D2L in the file labeled PROJECT& SUPPORT 8) (16 points total) The company wants to update their standards used in budgeting and accounting process to reflect certain changes they are expecting. (4 points) Material price: Management is working with their materials supplier to negotiate a new price/cost of their direct material. Perry Company is looking for a price that would "half" the price variance they saw in May. What price per foot will management want to negotiate? Hint- Use MPV (SP-APAQ: Set material price variance to 50% of May's variance (either in Ss or per unit) and solve for Actual Price. This will be the new material price standard for June. Show your work here and include your answers in the table below including the highlighted square. Remember to express your answer in terms of "per foof" price. a) b) (4 points) The production supervisor is implementing some changes to production that are expected to improve the materials quantity variance. With these changes, the supervisor believes May's favorable quantity variance would have been doubled. Using MQV (SQ-AQ)SP, Solve for Actual Quantity that would have doubled May's materials quantity variance. Remember to express your answers in terms ofper unit". This will be the new quantity standard for June. Include this in the table below for the square (2 points) The company has been providing additional training for their employees and various changes to the production process such that they expect labor efficiency to improve. The company believes June's production can meet the current labor standard (unchanged from May's hour per unit). What will the standard hour per unit be for June? Include in the square below c) (2points) The company has increased te wages of its employees by 5% to attempt to provide an incentive and improve moral of the employees. This 5% increase is to the "Actuar labor rate paid in May. This will be the new standard labor rate for June. Calculate the new standard per hour and include it in the d) square below.

Explanation / Answer

Workings:

Per unit Variances: DMPriceV Revision of Standards for: May June (Std.price-Actual Price)/ft.*Actual qty.(in ft.) 50%*(-0.70)=(1.8-AP)*1.75 MPV=(SP-AP)*AQ (1.80-2.2)*1.75 50%*(-0.70)=(1.8-AP)*1.75 -0.7 Solving the above equation, we get , U Std.Price /ft. SP= $ 2 DMQty.V (SQ for actual prodn.-Actual Qty.)/ft.*Std.Price/ft. (2*0.09)=(1.80-AQ)*1.80 MQV=(SQ-AQ)*SP Solving the above equation, we get , (1.80-1.75)*1.80 Std. qty./ft SQ= 1.7 /unit 0.09 F L Eff.V (Std. hrs.-Actual hrs.)/unit*Std. rate/hr. (SH-AH)/ft.*SR/hr. Std. Hrs./unit SH=same as May=0.90 (0.9-0.95)*19= -0.95 U L Rate V (Std. Rate.-Actual Rate)/hr.*Actual hrs./unit (SR-AR)/hr.*Actual hrs. SR /Labor hr.=May Actual $/hr.*1.05= (19-18.4)*0.95 ie. 18.4*1.05= 0.57 19.32 F Std. VOH hrs.= same as in May= 0.9 hrs./unit Std.VOH Rate/hr.= May Actual-0.2= 6.00-0.20= $ 5.80/hr

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