During June, the Conchran Manufacturing Company\'s costing system reported sever

Question

During June, the Conchran Manufacturing Company's costing system reported several variances that the production manager was surprised to see. Most of the company's monthly variances are under $125, even though they may be either favorable or unfavorable The following information is for the manufacture of garden gates, its only product Direct materials price variance, $800 unfavorable. Direct materials efficiency variance, $ 1,800 favorable. Direct manufacturing labor price variance, $4,000 favorable Direct manufacturing labor efficiency variance, $600 unfavorable Provide the manager with some ideas as to what may have caused the price variances Eric Segal has just purchased the film studio of a movie company that specializes in love stories The company did not try to estimate the cost of making a movie Instead, it just gave the producer a budget and told him or her to make a mode within budget. Mr. Segal does not like the former movie-budget concept and desires to establish a formal cost estimation system What are alternative methods of cost estimation that could be used in the movie making system? Briefly describe each method Claudia Geer, controller, discusses the pricing of a new product with the sales manager, James Nolan What are the two alternative long-run pricing approaches that Claudia and James must consider in pricing the new product? Discuss briefly which approach would be more appropriate for competitive, less competitive, and non competitive markets Which two capital budseting methods use discounted cash flow? How would you determine which one to use?

Explanation / Answer

1) Reasons for material price variance:

a) Rise in the prices of material than budgeted,

b) A small order size can be more expensive than large order size as the suppliers give discount on large order size.

c) Ineffeciency in buying the material.

d) Quality of material also impacts variance as low quality will be at a low cost and vice versa

e) There could be urgent need if there is some unexpected order accopted by company, so the material can cost more.

f) Choosing wrong suppliers or ineffcient suppliers.

g) Change in transportation cost can also impact because that cost is added to material.

Reasons for labour price variance:

a) Hiring of workers according to the job for example if more skilled workers are hired for a normal jo work than there would be unfavouable price variance.

b) Urgent requirement of labour due to acceptance of unexpected orders.

c) More or less of idle time than the standard also impact variance.

d) Training also impacts variance the workers if are properly trained than they would do work in better manner and will save money and vice versa

e) Staff morale and motivation also effects the variance if they are highly moy=tivated we can have favourable price variance as they will do the work fast and efficiently and vice versa.

Dear user please post one question at a time not multiple. I have answered the first question

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