Management and Cost Accounting
The Revenue was higher even though the actual number of units produced was less than the actual budgeted. The Revenue was higher because of the favorable price variance. The reason for a favorable price variance and unfavorable quantity variance is there were more materials used than allowed and the price was less than the standard price. In this case, the dolls may have been sold at a greater price than was budgeted, or perhaps more dolls whose sales price
is greater were sold than dolls whose sales price is less.
Not considering manufacturing overhead costs which includes packaging, shipping and receiving and production control, GG Toys should produce the Romaine Patch doll using only the scrap materials and only allow them to be made if there is scrap material available, I recommend this doll being produced. The Romaine Patch doll will bring many positives to the company. When considering the economy if people new they were producing materials that were eco-friendly and advise customers of the recycled materials they are producing, that would bring some positive to the company. Another reason why I believe GG Toys should produce the Romaine Patch doll is because using the scrapped materials will help the company gain more capital allowing them to sell this doll at a reasonable price, considering there are people who believe that the other GG Toys dolls may be to pricy for what they are willing to spend. Buying something from GG Toys is a lot more profitable as oppose to buying nothing from the company