assigment

ACCOUNTING TOOLS AND MEASURES FOR DECISION MAKING

For this Assignment, you will continue in your role as consultant to the Better Chair Company. Last week, you completed and submitted a report on types of costs and their implications for decision making. This week, the focus of your report will be the use of variance analysis and transfer pricing methods in making effective managerial decisions.

In addition to the requirements that follow, be sure to incorporate references to appropriate academic sources, such as those found in this week’s Learning Resources or those in the Walden Library.

RESOURCES

Be sure to review the Learning Resources before completing this activity.Click the weekly resources link to access the resources. 

WEEKLY RESOURCES

To prepare for this Assignment:

Download the Week 4 Part 1 Assignment Template.

Download the Week 4 Part 2 Assignment Template.

Your Instructor will provide part of the data to complete the calculations for this week’s Assignment. There will be two tabs in this document. The first tab will correspond to the “Variance Analysis” part of this Assignment and the second tab will correspond to the “Transfer Pricing” part of this Assignment. To access that information, refer to

Doc Sharing

.

BY DAY 7

Submityour completed business report and accompanying Excel file. Your report should be 3–4 pages in length (excluding title page and references) and should address the following:

VARIANCE ANALYSIS

The first area you have been asked to address for the management team in this report is to help them understand why the actual costs for the new chair are not aligning with the determined standard costs. The company has set up standard costs for labor and each component of the new chair. It now has the actual costs for the previous month’s production run. You are asked to determine which costs are meeting the standards and which are not, to analyze the probable cause of the variances, and to provide a recommendation for moving forward. To determine this, you will conduct a variance analysis. In Doc Sharing, your Instructor will provide you with standard and actual costs to use for this part of the Assignment.

To complete this part, address the following:

Using the Week 4 Part 2 Assignment Template and the data provided by your Instructor in the Doc Sharing area, calculate the price variances (price variance and wage rate variance) and quantity variances (quantity variance and labor efficiency variance) for each material and direct labor.

Note:In addition to submitting your work in Excel, include your calculations within your report by copying and pasting the information from Excel. For information on inserting data from Excel into Word, refer to the following:

Microsoft. (n.d.).

Insert a chart from an Excel spreadsheet into WordLinks to an external site.

.

https://support.microsoft.com/en-us/office/insert-…

Analyze what the variances to the standards are, including an examination of possible causes.

Propose at least two recommendations for potential remedies to address the variances.

Summarize how understanding variance analysis can impact managerial decision making.

TRANSFER PRICING

The next area you have been asked to address is regarding the decision to transfer the new lounge chair from its production division in Country X to the company’s retail division in Country Y. The management team wants to understand which transfer pricing method should be used: full cost or variable cost. In Doc Sharing, your Instructor will provide you with a scenario for The Better Chair Company to use for this part of the Assignment.

To complete this part, address the following:

Using the Week 4 Part 2 Assignment Template and the data provided by your Instructor in the Doc Sharing area, calculate the full-cost transfer pricing method and the variable-cost transfer pricing method.

Week 4 Assignment:
Accounting Tools and Measures for Decision Making—Part 2
Prepared by: Replace this text with your name.
Date: Replace this text with the submission date.
Walden University
WMBA 6050: Accounting for Management Decision Making
Page 1 of 4
Variance Analysis
Replace this text with introductory information. Add or remove headings as necessary.
[Heading]
Insert your calculations of the price and quantity variances for each material as well as
the rate and time variances for direct labor from Excel. Add or remove headings as
necessary.
For information on inserting data from Excel into Word, refer to the following:
Microsoft. (n.d.). Insert a chart from an Excel spreadsheet into Word.
https://support.microsoft.com/en-us/office/insert-a-chart-from-an-excel-spreadsheetinto-word-0b4d40a5-3544-4dcd-b28f-ba82a9b9f1e1
[Sub-Heading]
Replace or remove this text. Add or remove headings as necessary.
Page 2 of 4
Transfer Pricing
Replace this text with introductory information. Add or remove headings as necessary.
[Heading]
Insert your calculations of the full-cost transfer pricing method and the variable-cost
transfer pricing method from Excel. Add or remove headings as necessary.
For information on inserting data from Excel into Word, refer to the following:
Microsoft. (n.d.). Insert a chart from an Excel spreadsheet into Word.
https://support.microsoft.com/en-us/office/insert-a-chart-from-an-excel-spreadsheetinto-word-0b4d40a5-3544-4dcd-b28f-ba82a9b9f1e1
[Sub-Heading]
Replace or remove this text. Add or remove headings as necessary.
Page 3 of 4
References
[Please delete this note before submitting your Assignment. For more information about
formatting your reference list, please visit the following site:
https://academicguides.waldenu.edu/writingcenter/apa/references.]
Include appropriately formatted references to support your Assignment. Refer to the
Assignment guidelines for further information on the requirements.
Page 4 of 4
Week 4 Variance Template
a) Price variance = (actual price – standard price) times quantity bought
Actual
price
Standard
price
Quantity
bought
Price
variance
Favorable or
Unfavorable
Plastic tubing
Fabric
Padding
b) Wage rate variance = (Actual wage rate – standard wage rate) times actual hours
Actual
Standard
wage rate wage rate
Actual
hours
Wage rate Favorable or
variance Unfavorable
Direct labor
c)Total price variance
0
0
0
0
d) Quantity variance =
(actual quantity used in production – standard quantity used in production) times the standard price
Actual
Quantity
Standard
Quantity
Standard
Price
Quantity
variance
Favorable or
Unfavorable
Plastic tubing
Fabric
Padding
e) Labor efficiency variance = (actual hours – standard hours) times standard wage
Actual
hours
Standard
hours
Standard
wage
Efficiency
variance
Direct labor
f) Total quantity variance
TOTAL VARIANCES
Plastic tubing
Fabric
Padding
Direct labor
TOTAL
0
–
Favorable or
Unfavorable
andard price
Week 4 Assignment
Full Cost
Alpha Division Taxes:
Transfer Price
Less (subtract) Cost
Taxable Income
Taxes (or refund)
Beta Division Taxes:
Sales Price
Less (subtract) Transfer Price
Taxable Income
Income Taxes
Import Duty
Taxes (or refund)
Total Taxes
Variable Cost
0
0
0
0
0
0