Week 5 Assignment
EazyRight, Co. is a manufacturer of high-quality products designed to help support healthy backs and spines. Their newest product offering is a massage chair. Below is the standard cost structure for the chair:
Standard Cost Sheet: Massage Chair
|
Metal tubing |
6 meters @ $3.50 |
$21.00 |
|
Leather |
3 square meters @ $7.50 |
$22.50 |
|
Padding |
4 kilograms @$4.50 |
$18.00 |
|
Direct labor |
4 hours @ $15.00 |
$60.00 |
|
Total standard cost |
|
$121.50 |
This month, EazyRight, Co. manufactured 500 massage chairs. The following costs were incurred:
Actual Costs Incurred for the Month: Massage Chair
|
Metal tubing |
3,200 meters |
$11,520 |
|
Leather |
1,300 square meters |
$9,815 |
|
Padding |
1,800 kilograms |
$8,280 |
|
Direct Labor |
2,050 hours |
$30,200 |
|
Total cost |
|
$59,815 |
Adapted from: Zimmerman, J. L. (2014). Accounting for decision making and control (8th ed.). New York: NY: McGraw-Hill, “Healing Touch”, p. 565.
Suppose you are the senior controller for EazyRight, Co. and you plan to perform a variance analysis of the massage chairs manufactured to determine if the standards are being met. Once you have completed the analysis, you plan to show it to the production department manager and ask for an explanation of any variances that you believe should be examined.