Early in September of This Year, Frank Company's Long-Time Supplier

Essay

Early in September of this year, Frank Company's long-time supplier, the Lloyd Company, was closed unexpectedly because of a labor strike. Frank was forced to seek a backup supply source. After considerable delay, raw materials were obtained, but they were of significantly lower quality than those Lloyd provided, and they were more expensive because of special handling required to rush the orders. The delay created an unusual increase in idle time during the month; and once production resumed, the poor quality raw materials produced reductions in labor and machine productivity and increases in materials waste. Noticing a decline in employee morale, the plant manager decided to provide a company-sponsored employee picnic at the end of the month. By the beginning of October, Lloyd Company employees were back to work and Frank's operations were back to normal.
Required:
Identify factors from the problem that would likely cause the Frank Company to experience unfavorable variances. Indicate which of the following variance(s) was most likely affected by the factors identified in your answer.
.Materials price variance
.Materials quantity variance
.Labor efficiency variance
.Variable overhead spending variance
.Variable overhead efficiency variance
.Fixed overhead budget variance