Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 44

Direct Labor Rate and Efficiency Variances; Productivity Measures; Review of Chapter 14 Textron Manufacturing Inc. assembles industrial testing instruments in two departments, assembly and testing. Operating data for 2012 and 2013 follow:

The firm assembled and tested 20,000 instruments in both 2012 and 2013.
Required (in your productivity calculations use 6 significant digits after the decimal point)
1. Calculate the direct labor rate and the efficiency variances for both departments in both years.
2. Calculate the direct labor partial operational productivity ratio for both departments in both years.
3. Calculate the partial financial productivity for both departments in both years.
4. Compare your answers for requirements 2 and 3. Comment on the results.
5. How do productivity measures offer different perspectives for the firm's strategic decisions from those of variance analysis