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You’re working as an accounting analyst with a large manufacturing company, Bolton & Sons, Inc., when your manager comes to you with a request. The CFO is very concerned about the manufacturing variances from the previous month which are as follows:

Material price variance	$7,300 (unfavorable)
Material efficiency variance	$2,000 (favorable)
Labor rate variance	$6,200 (unfavorable)
Labor efficiency variance	$1,500 (unfavorable)
Variable overhead efficiency variance	$2,400 (unfavorable)
Variable overhead spending variance	$2,900 (favorable)
Fixed overhead spending variance	$3,600 (favorable)
Production-volume variance	$4,700 (unfavorable)

The CFO doesn’t understand why these numbers are “all over the place.” You have been placed in charge of the research, analysis, and explanation of these variances.

Requirement:

Prepare an internal memo addressed to the CFO, Michelle Winters. In this memo, you will explain the following associated with each variance:

Causes or drivers of the variance

Other departments or employees that you consulted for information

Any plans to adjust or combat these variances moving forward

You are encouraged to be creative with this part of the assignment as there is no single right or wrong answer; numerous factors can drive the variances at any given company. You’ll just be looking for logical explanations and suggestions for management and/or operations moving forward to improve these variances for future accounting periods.

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