C6. In this segment of our continuing case, assume that you havebeen using standard
costing to plan and control costs at your cookie store. In ameeting with your budget
team, which includes managers and employees from the Purchasing,Product Design,
and Production departments, you ask all team members to describeany operating problems
they encountered in the last quarter. You explain that you will usethis information
to analyze the causes of significant cost variances that occurredduring the quarter.
For each of the following situations, identify the direct materialsand/or direct labor
variance(s) that could be affected, and indicate whether thevariances are favorable or
unfavorable.
1. The production department uses highly skilled, highly paidworkers.
2. Machines were improperly adjusted.
3. Direct labor personnel worked more carefully than they had inthe past to manufacture
the product.
4. The Product Design Department replaced a direct material withone that was less
expensive and of lower quality.
5. The Purchasing Department bought higher-quality materials at ahigher price.
6. A major supplier used a less-expensive mode of transportation todeliver the raw
materials.
7. Work was halted for 2 hours because of a power failure.
