Beta Company
Beta Company
Master of Business AdministrationManagerial AccountingBA 206Written Analysis of the CaseBeta CompanyQuestion # 1: Direct Material Price VarianceMaterial X = ($15-$14.50) x 39,000 units = $ 23,4000 FAVORABLEMaterial Y = ($9.50-$9.70) x 11,000 units = $ 2,200 UNFAVORABLEDirect Material Usage Variance Material X Material YP-A = 4,200 units x 4lbs = 16,800 P-A = 4,200 units x 1lbs = 4,200P-B = 3,600 units x 6lbs = 21,600 P-B = 3,600 units x 2lbs = 7,000 Standard 38,400 units Standard 11,400 unitsMaterial X = (38,400-39,000) = 600 units x $ 15 = $ 9,000 UFMaterial Y = (11,400-11,000) = 400 units x $ 9.50 = $ 3,800 FDIRECT MATERIAL VARIANCEStandard XProduct A = 4,200 x 4 = 16,800 (15) = 252,800Product B = 3,600 x 6 = 21,600 (15) = 324,000 TOTAL FOR MATERIAL X 576,800Standard YProduct A = 4,200 x 1 = 4,200 (9.50) = 39,900Product B = 3,600 x 2 = 7,200 (9.50) = 68,400 TOTAL MATERIAL Y 108,300 TOTAL MATERIAL STANDARD 685,100ActualMaterial X = 39,000 x 14.40 = 561,600
Material Y = 11,000 x 9.70 = 106,700 TOTAL MATERIAL ACTUAL 668,300 DIRECT MATERIAL VARIANCE = $ 16,800 FQuestion # 2 Direct Labor Rate Variance= ($ 18 -$ 17.50) x 2,025 hrs. = $ 1,012.50 FAVORABLE Direct Labor Efficiency varianceProduct A = 1/5 hrs x 4,2200 = 840 hrs.Product B = 1/3 hrs. x 3,600 = 1,200 hrs. Total Hrs. Standard 2,040 hrs. Total Hrs. Actual 2,025 hrs. Total Variance 15 hrs. or (15hrs. x $ 18) $ 270DIRECT LABOR VARIANCEStandard Product A = 4,200 units x 1/5 = 840 ($ 18) = 15,120 Product B = 3,600 units x 1/3 = 1,200 ($ 18) = 21,600 Standard 36,720