Problem: Phoenix Manufacturers makes blank computer disks. It takes one-eighth of a pound of direct materials and one minute of direct labor at standard per disk. Direct materials cost $2.60 per pound at standard, and the standard direct labor rate is $6.00 per hour.
During April, 35,200 disks were made, and the company experienced a $260 unfavorable material quantity variance. The purchasing agent had purchased 400 pounds of material more than the company used, incurring a favorable price variance of $200. Six hundred total direct labor hours were incurred in making disks, and a total unfavorable labor variance of $120 occurred.
Question 1. Determine the following:
a. Standard quantity of materials allowed.
b. actual quantity of materials used.
c. actual quantity of materials purchased.
d. actual price of materials purchased.
e. standard hours allowed for production
f. labor efficiency variance
g. actual labor rate paid
Question 2. The use of variance analysis often results in "management by exception." discuss the meaning and behavioral implications of "management by exception." explain how employee behavior could be adversely affected when "actual to standard" comparisons are used as the basis for performance evaluation.