Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 24

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 the current and prior year follow:

The firm assembled and tested 20,000 instruments in both years.
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 ratio for both departments in both years.
4. Compare your answers for requirements 2 and 3. Comment on the results.
5. How do productivity measures differ from variance analysis, in terms of the types of perspectives they offer for the firm's strategic decision making