The Following Events Occurred at Eureka Manufacturing (EM), an Assembler

Essay

The following events occurred at Eureka Manufacturing (EM), an assembler of engine parts, during March:
1. Because of a stock shortage at its regular supplier, EM had to rely on a new vendor for two purchases of raw material parts. The vendor required EM to pay air-freight charges; however, upon arrival, the company found the goods to be above-average in quality.
2. The local municipality raised its property tax rates by 2%.
3. A flu outbreak on the assembly line forced management to use more experienced, senior personnel to complete production orders on a timely basis. These workers more than made up for lost time.
4. A shoddy maintenance program resulted in an abnormally high number of breakdowns on machine no. 76 and slowed production.
5. The implementation of a new program had positive effects for the company with respect to material usage and worker productivity.
Required:
Create a table with the following headings: material price variance, material quantity variance, labor rate variance, and labor efficiency variance. Determine which of these variances would be affected by the individual events and whether the variance would be favorable or unfavorable.