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Question: Petersen Pottery Just Outside of Elkins, West Virginia, High in
Question: Petersen Pottery Just Outside of Elkins, West Virginia, High in
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After 6 months of operations using the new cost system Clive was disturbed over the lack of attention
paid to the standards. He felt that the potters were just too set in their ways to pay any attention to the
“confusing” new system. As one of the potters observed, “ I have been making these !xtures a lot longer
than these new ideas have been around, and I don’t see how a bunch of numbers that some hot-shot
accountant puts together are going to help me make any better toilets.” The result was that although the
standards existed, they were seldom met.
In reviewing the June production results, the following actual costs for 1,145 !xtures were noted:
Materials Purchased
Clay 30,000 lb @ $ .92/lb
Glaze 6,000 lb @ $ .78/lb Book Now
Materials Used
Clay 28,900 lb Whenever you're ready to travel, we'll be here.
Please follow local travel and safety guidelines.
Glaze 5,900 lb
Direct Labor
Molding 1,200 hr @ $15.25/hr
Glazing 600 hr @ $15.00/hr
Before proceeding with further analysis, Clive met with his most experienced master potter, Jim
Sedge!eld, to discuss the continued variances from the standards. He was seriously considering
implementing a standard metal mold system to replace the existing manual system of shaping !xtures.
When Sedge!eld arrived, Clive explained the problem: “Jim, you insist the standards are reasonable and
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yet you never meet them. It looks like we will have unfavorable variances again this month.” Sedge!eld
was not impressed. “Well Clive,” he said, “I don’t understand this system at all. Why don’t you ask that
fast-talking accountant to explain the variances? He seems to know what these numbers mean. All I know
is, we seemed to spend all month fussing with that new brand of clay you said was going to be cheaper
for us.”
QUESTIONS
1. Analyze cost performance for June. Calculate all important variances.
2. What conclusions are suggested regarding cost performance for the month?
3. Write or type a rough draft of a report to Clive detailing the major problems you !nd with the system or
operations. You must have three presented in order of importance with one paragraph for each.
Expert Answer
Q: Petersen Pottery Just outside of Elkins, West Virginia, high in the Appalachian Mountains, Clive Petersen had been
making ceramic bathroom !xtures since 1980. Petersen !xtures (commonly called toilets) had become known over the
years for their distinctive custom features, and their long life. Petersen Pottery had grown from a two-man operation
in 1990 to the present group of 2...
Q: Please help solve the petersen pottery case. The questions are as follows: Analyze the variances for the month using
whatever format you like. What conclusions are suggested regarding cost performances for the month? What
suggestions do you have for Mr. Petersen regarding his new standard cost system? Thank you for your time and help.
Really appreciate it.
A: See answer
Q: Petersen Pottery Just outside of Elkins, West Virginia, high in the Appalachian Mountains, Clive Petersen had been
making ceramic bathroom !xtures since 1980. Petersen !xtures (commonly called toilets) had become known over the
years for their distinctive custom features, and their long life. Petersen Pottery had grown from a two-man operation
in 1990 to the present group of 2...
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