Nova Southeastern University H.

Wayne Huizenga School of Business & Entrepreneurship

Assignment for Course: ACT-5060-TAM, Acct. for Decision Makers Submitted to: Dr. Lippincott Submitted by: Nimesh Patel 5606 32nd ST E; Ellenton, FL 34222 (941) 405-2938

Date of Submission: Title of Assignment:

June 5, 2011 Eastvaco Crop. Variance Analysis

CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Student's Signature:Nimesh Patel ***************************************************************** Instructor's Grade on Assignment: Instructor's Comments:

Variance Analysis

Q1) Explain how each of variance could be explained?

Materials Price Variances:is the difference between the amount paid for a resources and the amount that would have been paid if the resource had been purchased at its standard price. It is calculated by measuring price per ounce. Its actual ounce per price is lower then standard price per ounce. Therefore it is consider favorable. Materials Quantity Variances: is the difference between the amount of a resource used and amount allowed. Given the level of production cost at the standard cost of the resource. Its actual unit per ounce per unit is higher then standard ounce per unit. Therefore, it is consider unfavorable.

Labor Rate Variance:is the difference between the amount ofactual hours worked at actual rate and actual hours worked at standard rate. Actual rate paid to workers is less than standard rate. As a result, actual result is more than the standard rate, as actual rate is more than standard rate it is unfavorable labor rate variance. Labor Efficiency Variance: it measures the productivity of labor time. Actual processing time is less then processing time allowed by standard. Therefore, it is favorable.

Q2) Explain how the variance could explain the following situation: Inspection time increases could be cased by either poor material leading to sub quality products or using cheaper more inexperience labor. This would result in favorable materials price variance and / or unfavorable labor efficiency variance indicating that the worker are taking too long to construct the product. This will in unfavorable labor efficiency variance because, inspection labor work time will increase as well time spent inspecting per unit will also increases.