Discussion Question

Using Standard Costing Information to Improve Efficiency

As head plant manager, overseeing the entire production cycle, you have received a report from your accounting staff showing the results of your standard costing practices, shown below:

  • Materials Price Variance – 80,000 Favorable
  • Materials Quantity Variance – 60,000 Unfavorable
  • Labor Rate Variance – 75,000 Unfavorable
  • Labor Efficiency Variance – 90,000 Unfavorable

It is your job to bring these variances more in line so that the plant runs more efficiently and effectively.

What are the first steps you take for corrective action, to whom do you address this variance problem, and why do you feel that they should be held responsible?

Provide specific details to support your opinion in your response. Take time to read and comment on the responses of others

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