Expected production (units) 20,000

Question #4 (24 points)
Expected production (units) 20,000
Standard DML hours per unit 8
Standard DML rate per hour $25.00 
Standard pounds of DM usage per unit 3
Standard DM price per pound $9 

Actual units produced 21,000
Actual DML hours worked 178,500
Actual cost of DML $4,819,500 
Pounds of DM purchased 76,000
Total cost of DM purchased $646,000 
Pounds of DM used 73,500

a) Calculate the following variances:
Direct manufacturing labor rate variance
Direct manufacturing labor usage variance
Direct materials price variance
Direct materials usage variance

b) Explain what each of the calculated variances imply about this firm’s operations. Be specific in your explanations. 
Direct manufacturing labor rate variance
Direct manufacturing labor usage variance
Direct materials price variance
Direct materials usage variance

Question #6 (16 points)
Consider the following quality cost report: 

Q1 Q2 Q3 Q4
Prevention costs $750 $750 $740 $730 
Appraisal costs $650 $660 $675 $690 
Internal failure costs $710 $750 $825 $850 
External failure costs $900 $925 $940 $980 
Total quality costs $3,010 $3,085 $3,180 $3,250 
Total revenues $16,480 $18,160 $18,600 $18,040 

Do you believe this firm’s quality initiatives have been successful? Be sure to justify your opinion with specific information.

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