259 Bedco

a) Material price planning variance

Standard price Revised price Variance Actual cottoVariance
Bed sheets 5 6 1 248000 248000
Pillow case 5 6 1 95000 95000
343000 (A)
Material price operational variance
Revised price Actual price Variance Actual cottoVariance
Bed sheets 6 5.8 -0.2 248000 -49600
Pillow case 6 5.8 -0.2 95000 -19000
-68600 (F)
Material usage planning variance
Standard usage Revised usage Variance Actual unit Standard pVariance
Bed sheets 2 2.2 0.2 120000 5 120000
Pillow case 0.5 0.55 0.05 180000 5 45000
165000 (A)
Material usage operational variance
Revised usage Actual usage Variance Actual unit Standard pVariance
Bed sheets 2.2 2.07 -0.13 120000 5 -80000
Pillow case 0.55 0.53 -0.02 180000 5 -20000
-100000 (F)

b)
In November, there are some change which are out of control of the production manager.
The world commodity price of cotton increased by 20%. Therefore, the material price planning variance is adverse
The hotel chain requests a new design which is required 10% more cotton than previously. Therefore, the material usage plan
As a result, the production delays and a shortfall in production of 10000 pillowcases in Nov
Because of the uncontrollable expenses above, it is not accurate to assess the performance of production manager based on p

From the material price and usage operational variance, the variances are favourable.
For the material price operational variance, we can see that the production manager is good at dealing the purchase material
For the material usage operational variance, the material usage is managed efficiently.

In light of the above, the performance of the production manager is good and efficient.

Marking Scheme

price planning variance 3 3

price operational variance 3 3
usage planning variance 3 1 would be 3 if you didn't revise bedsheets
usage operational variance 3 1 think you made a typo in the formula, check the cells
assess
not responsible for planning varia 2 2
favorable price operational 2 2
adverse usage operational variance 2 0
production delay not due to mana 2 1

Total 13
 45000 120000

20000 -120000

ariance is adverse
fore, the material usage planning variance is adverse also.

oduction manager based on planning variances

ealing the purchase material price lower than the revised price.

mula, check the cells