Rust Belt Mufles

Topics: Cost, Economics, Price Pages: 2 (722 words) Published: February 21, 2010
Material & Labor Variances Assuming there are no inventories from previous year. Let's look at Material Price variances as well as labor wage & efficiency variance as the data provided allows us to look at all these parameters. With no understanding of Materials details & measures, I will not be looking at material quantity variance. {draw:frame} {draw:frame}

In terms of interpretation, an easy one to make could be : State Street Shop manager has probably chosen the right supplier in terms of prices and also quality that could have helped the labor efficiency to raise at the calculated levels. Dewey Ave. has not managed to achieve such as good value for money in materials prices but quality selected was probably still to a high standard as labor efficiency is also favorable. Mt Hope Ave seems to have made the wrong choices in terms of materials, driving labor efficiency to negative results. This is probably too easy a list of comments to make especially when one thinks : how can it be possible to buy high quality material at such a favorable price variance in State St. Shop, deliver such a favorable labor efficiency for only 500 installations less than expected ? If quality of material was linked to its price and would raise labor efficiency, then probably Mt Hope Ave should have shown the best labor efficiencies (ignoring they delivered more than the expected installations on top of all). According to budgeted values, Mt Hope Ave. should have performed better than the other shops, having worked on more installations than expected. The description of the business suggests that there are 2 types of activities, the standard costs however only define one labor rate as well as one materials cost rate/installation. On top of this, the measurement of the costs show averages, there is no way to distinguish labor type used for the specific tasks which again are not defined or measured independently, Madison also defines that actual...
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