Variance Analysis on New Look Jackets Essay

Use of the flexible budget shows the budgeted operating income given the actual sales. When you compare the flexible budget to the actual budget you are able to compare the total sales and cost incurred given the same units sold. The sales price variance, which is the actual sales less the flexible budgeted sales, was $14,700 favorable. This means that actual sales were higher than budgeted sales at that usage. This is attributable to the increase in service price from $25 to $26.40. Price variance for material usage was $2,100 over the flexible budget projection. This could be attributed to overuse or waste of materials. As expected, the direct labor price variance was $3,375 lower than the flexible budget amount. This is attributed to the manager’s effective use of labor. Operating expenses were also higher than the flexible budget

WeaveTech, formally known as Johnson-Ware is a military and security apparel company entering into the high-end performance clothing market. Before the acquisition by CVX Partners, WeaveTech which was formed in 1905, relied exclusively on the military (70%) and security (30%) customer base. The need to change the company’s customer base from military and security to high-end performance clothing market apparently arose from the allure of the later market segment and the dwindling growth of the military and security market (Beer & Swiercz, 2015). The departure of Jack Davidson, a retired US Navy Rear Admiral, and WeaveTech CEO from 1983 to 2012 in addition to the conclusion of the Afghanistan and Iraq Wars meant that the traditional market was losing its reliability. Due to the unreliability, there was a need to redesign the customer base and to take advantage of the high-end market segment.

Levi’s decided to place their product in department stores as they had good relations with the retailers due to their volume sales of jeans. They did not have any real relationship with the specialty stores where the independent male shopped. Rather than placing their new products which would be considered as high-end in these specialty stores and where they would be among the lower price range, they chose to place their products in the department stores where their products showed a deviation from the regular Levi formula and were considered very pricy as compared to other high-end department store brands such as Haggar’s. This price raised some concerns among the retailers as they were unsure if Levi’s formal wear would move out of the stores at a required pace. Also, due to price-quality inference, if Levi’s was placed in a specialty store, the Q2 customer might prefer to buy a more expensive product.  Levi tried to sell these formal clothes in the same stores as their casual clothes for the same segment of customers. Customers saw these formal clothes at the same place priced higher than the casuals, and therefore found them to be expensive.

That all these more qualitative factors impacted measurably on performance is demonstrated by the fact that the labour content per garment in a cell environment was no worse – and in some cases better – than the 10 minute line standard, a result which was contrary to management’s initial expectations.

Only the incremental costs and benefits are relevant. In particular, only the variable manufacturing overhead and the cost of the special tool are relevant overhead costs in this situation. The other manufacturing overhead costs are fixed and are not affected by the decision.

This was favorable, but the Efficiency Variable was 100,000 unfavorable. This suggest that Competition Bike received a great price, but with the unfavorable Efficiency there were a lot of left over materials suggesting the material might not be the best quality. Direct Labor had a 150,000 Unfavorable Variance, but had a 50,000 favorable Efficiency Variance. The labor cost was up due to the high skill level needed for the bike manufacturing. The 50,000 favorable Efficiency Variance enabled the high skill labor to perform the task very efficiently. The Manufacturing Overhead had a 24,000 unfavorable Price Variance, and a 2426 unfavorable Efficiency Variance. The Advertising Cost had a 5,000 unfavorable Price Variance and a 1246 favorable Efficiency Variance. This suggest that Competition Bike spent more on Advertising in order to boost lagging sales, and the favorable Efficiency Variance shows that even though more was spent than budgeted, the money spent was efficient and worth the increase. The Transportation Out had a 3207 unfavorable Price Variance and a 2400 unfavorable Efficiency Variance. This suggest that Transportation cost were up due to increased fuel cost, and this increase in cost resulted in unfavorable Efficiency Variance due to transporting fewer bikes with increase in fuel cost.

NLJ produces and sells two lines of jackets: nylon and leather. The market for nylon

Wilkerson employs a Normal Cost System, which means that they use predetermined overhead rates along with actual costs for direct material and direct labor. Normal costing systems are appropriate when overhead costs are a relatively small percentage of total manufacturing costs and product diversity is limited. For Wilkerson, normal costing does not make sense. Overhead costs make up over 50 percent of total manufacturing costs and their product offering is relatively more diverse. This indicates that the current accounting system in place may be distorting costs significantly. Supporting data:

Moreover many precautions are also being taken in order to stop the use of child or forced labour in making of products but still you cannot be sure.

There are more outgoing costs in the production process for the Nike hoodies than the ‘Tesco Value Bread’ as the clothing’s going to more places, and costs a considerable amount more to make than the bread.

The introductory of the documentary examines the fabric mills of Bangladesh. It is very competitive in the international market place to find low cost labor; when merchandise manufactured in another country is imported these country put on a duty rate. Apparel companies contemplating low cost labor,

* Improving labourer training procedures, leading to increased productivity, lower reject rates. These improvements will also increase style and quality ratings, as consumers know associate this with the extra effort and attention to detail put into each pair of shoes

The true variable costs to Beauregard Textiles include the Direct Labor, Material, Material Spoilage, and Direct Department Expense. By excluding those expenses not related to the production of T-30, we can calculate the contribution margin for Beauregard using unit sales price and unit variable cost. Contribution margin is a measurement of the profitability of a product and is an excellent management tool to help determine whether to keep or drop certain aspects of the business. A positive contribution margin means that the company should produce the product, a negative contribution margin means the company is likely to suffer from every unit it produces.

Costs were lowered by the elimination of standard box packaging for individual pairs of shoes. They were also decreased by the reduction of stock-keeping units (fewer styles, sizes, etc) and by the use of inexpensive plastic resin material (Croslite) compared to other fabrics which allowed Crocs to lower manufacturing costs because product could be made faster and cheaper using injection molding machines compared to traditional labor intensive methods.

The global manufacture chain is helpful to reduce the cost because the apparel production is highly labour-intensive (Z02). For example, a jacket was produced among many countries to make a good use of the price advantages of different areas.