Fella Design Co. uses a standard cost system. One of the company’s most popular products is a cherry wood desk. The per-unit standard costs of the desk, assuming a “normal” volume of 2,000 units per month: Accounting Assignment, OUM, Malaysia

Question 2

Fella Design Co. uses a standard cost system. One of the company’s most popular products is a cherry wood desk. The per-unit standard costs of the desk, assuming a “normal” volume of 2,000 units per month, are as follows:

During May, 1,500 desks were scheduled and produced at the following actual unit costs:

Required:

Evaluate the performance of the company in terms of materials price and quantity variances, the labor rate and efficiency variances, and the overhead spending and volume variances for the month.
Evaluate the possible reasons behind each of the variances.

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