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Essay text:
This report needs to be re-arranged to compare variances more accurately:
38000 38000 35000
Overheads Unit Cost Actual Variance Flexible Variance Static
Utilities 0.40 15700 500U 15200 1200U 14000
Indirect labour 2.30 86500 900F 87400 6900U 80500
Supplies 0.60 26000 3200U 22800 1800U 21000
Maintenance 1.20 44900 700F 45600 3600U 42000
173100 2100U 171000 13500U 157500
Spending Efficiency
15600U
From this new Performance Report we can see that 13.5% of the unfavourable variance is due to the Spending Variances and 86.5% Efficiency Variance.
The unfavourable spending variances are Supplies and Utilities, we use variance analysis to look at this closer and find that the problems are with the price and the quantity used...
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