Markman Industries employs a standard cost system. It has established the following standards for the prime costs of its air rifle product line: Standard quantity Standard price Standard cost Direct materials $21.80/kg $ 87.20 4 kg 0.5 direct labour hours (DLH) $20.00/DLH 4.00 $ 91.20 Direct labour During November, Markman purchased 13,000 kg of direct materials at a total cost of $295,100. The total factory wages for November were $38,000, 90% of which were for direct labour. Markman manufactured 3,500 air rifles during November, using 13,500 kg of direct materials and 1,900 direct labour hours. Required: a) What was the direct labour efficiency variance for November? b) Over the past year, Markman's management team attempted to reduce the number of customer complaints relating to the product by sourcing higher-quality direct materials from a different supplier. Explain the effect this has had on the direct
Markman Industries employs a standard cost system. It has established the following standards for the prime costs of its air rifle product line: Standard quantity Standard price Standard cost Direct materials $21.80/kg $ 87.20 4 kg 0.5 direct labour hours (DLH) $20.00/DLH 4.00 $ 91.20 Direct labour During November, Markman purchased 13,000 kg of direct materials at a total cost of $295,100. The total factory wages for November were $38,000, 90% of which were for direct labour. Markman manufactured 3,500 air rifles during November, using 13,500 kg of direct materials and 1,900 direct labour hours. Required: a) What was the direct labour efficiency variance for November? b) Over the past year, Markman's management team attempted to reduce the number of customer complaints relating to the product by sourcing higher-quality direct materials from a different supplier. Explain the effect this has had on the direct
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.2SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...
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