Kellogg Company manufactures and markets ready to eat cereal andconvince foods including raisin bran, pop tarts, rice Krisp treatsand Pringles. In addition to the raw material used when producingits products. As of January 2, 2016, Kellogg Company hasapproximately 33,577 employees. A shortages in the labor pool,regulatory measures and other pressures could increase thecompany's labor cost, having a negative impact on the company'soperating income.
1. Suppose Kellogg company noticed an increase in its actualdirect labor cost compared to the budgeted amount. How couldKellogg Company investigate it?
2. What is the direct labor cost variance and how would acompany calculate this variance?
3. What is the direct labor efficiency variance and how would acompany calculate it?
4. Suppose that Kellogg company found an unfavorable totaldirect labor variance that was due completely to the direct laborcost variance. What measures could Kellogg company take to controlthis variance?
5. Suppose that Kellogg company found an unfavorable totaldirect labor variance that was due completely to the direct laborefficiency variance. What measures could Kellogg company take tocontrol this variance?
