Benchmarking Units Produced = 80,000 Units Sold = 60,000 Direct Materials Purcha
ID: 2602333 • Letter: B
Question
Benchmarking
Units Produced = 80,000
Units Sold = 60,000
Direct Materials Purchased and Used
Actual square yards of cloth purchased and used: 128,000
Actual price incurred per yard: $1.25
Actual handles purchased and used: 80,808
Actual price per handle/rib/stretcher assembly: $0.99
Direct Manufacturing Labor Used
Actual direct labor hours used: 15,748
Actual price per hour: $7.62
Direct labor costs: $120,000
Standard Rates
Standard labor hours per unit: 0.20
Standard labor price per hour: $7.50
Square yards material per unit: 1.50
Standard price per yard: $1.15
Handle/rib/stretcher assembly per unit: 1
Standard price per handle assembly: $1.05
Calculate price variances for material and labor and denote whether they are favorable or unfavorable. DONE:
Actual
Standard
Actual Quantity
Variance
Favorable or Unfavorable
Cloth
$1.25
$1.15
128,000
$12,800.00
Unfavorable
Handle Assembly
$0.99
$1.05
80,808
-$4,848.48
Favorable
Labor Price Variance
$7.62
$7.50
15,748
$1,889.76
Unfavorable
Calculate efficiency variances for material and labor and denote whether they are favorable or unfavorable. DONE:
Actual
Standard
Standard Price
Variance
Favorable or Unfavorable
Cloth
128,000
120,000
$1.15
$9,200.00
Unfavorable
(1.5 Yards per Unit)
Handle Assembly
80,808
80,000
$1.05
$848.40
Unfavorable
(1 per Unit)
Labor
15,748
16,000
$7.50
-$1,890.00
Favorable
(.20 per Unit)
B. Identify possible approaches to benchmarking. Describe each.
Actual
Standard
Actual Quantity
Variance
Favorable or Unfavorable
Cloth
$1.25
$1.15
128,000
$12,800.00
Unfavorable
Handle Assembly
$0.99
$1.05
80,808
-$4,848.48
Favorable
Labor Price Variance
$7.62
$7.50
15,748
$1,889.76
Unfavorable
Explanation / Answer
B) There are multiple approaches to benchmarking.
The possible benchmarking approaches include competitive benchmarking, Internal benchmarking, External benchmarking, Functional benchmarking, Process benchmarking, and Strategic benchmarking.