The materials purchasing manager purchased 12,000 units of component K2X from a new source at...
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Accounting
The materials purchasing manager purchased units of component KX from a new source at a price $ below the standard unit price of $ These components turned out to be of extremely poor quality with defects occurring at three times the standard rate of The higher rate of defects reduced the output of workers who earn $ per hour from units per hour to units per hour on the units containing the discount components. Each finished unit contains one KX component. To appease the workers who were irate at having to work with inferior components the production manager agreed to pay the workers an additional $ for each of the components good and bad in the discount batch. Variable manufacturing overhead is applied at the rate of $ per direct labor hour. The defective units also caused a hour increase in total machine hours. The actual cost of electricity to run the machines is $ per hour.
A Effect on materials price variance:
BEffect on materials quantity variance:
C Effect on labor rate variance:
B Effect on labor efficiency variance:
CEffect on variable overhead spending variance:
DEffect on variable overhead efficiency variance:
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