How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask F. Naz Your Own Question
F. Naz
F. Naz, Chartered Accountant
Category: Homework
Satisfied Customers: 5326
Experience:  Experience with chartered accountancy
Type Your Homework Question Here...
F. Naz is online now
A new question is answered every 9 seconds

Direct material variances-the price versus usage trade-off:

Resolved Question:

Direct material variances-the price versus usage trade-off: A company manufactures quality replacement parts for the auto industry. It uses a standard scoting system and isolates variances as soon as possible. The purchasing manager is responsible for controlling the direct material price variances for the hundreds of raw material items that are used in the company's various production processes.Recent experience indicates that, in the aggregate, direct material price variances have been favorable. However, several problems have occurred. Direct material usage variances have become consistently unfavorable for many items, and the company's total budger variance for direct material has been unfavorable during each of the past six months. Direct laborers have complained about the quality of certain raw material items, and major costomers have canceled purchase orders. In the maentime, the company's reay materials inventory has increased by nearly 240%. Required: a) Give a probable explanation of why these results have occurred. (Hint: what might the purchasing manager be doing tht is dysfunctional for the company as a whole?) and b) How could the performance reporting system be improved to encourage more appropriate behavior on the part of the purchasing manager?
Submitted: 5 years ago.
Category: Homework
Expert:  F. Naz replied 5 years ago.

Click Here For The Solution

Have a nice day

Please do not hesitate to ask further and if you are satisfied do not forget to click on ACCEPT button so I get paid for my efforts, thanks.

F. Naz and other Homework Specialists are ready to help you
Customer: replied 5 years ago.
Thank you Muhammad for your solution. I like it, but can I ask you another short question. Why do you use cost formula in performance reporting? Thank you.
Expert:  F. Naz replied 5 years ago.

You need to spend $3 to view this post. Add Funds to your account and buy credits.