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PERFORMANCE MANAGEMENT FOR ACCOUNTANTS PROJECT QUESTION 1 - VARIANCE ANALYSIS November 2022 Style Manufacturing Company (SMC) designs and constructs coffec tables and 4-seater dining tables with chairs that it supplies to hotel chains throughout the Caribbean. It uses a just-in-time system and holds no inventories. The standard cost of the wood used to make the tables is $25 per foot. Each coffee table uses 3ft of wood and each 4-scater dining table with chairs uses 8ft of wood. Production levels for July were as follows: The actual cost of the wood in March was $32 per foot. 35,000ft of wood was used to make the coffee tables and 120,000ft used to make the dining tables and chairs. The wood is sourced from Central America, and there was a bush fire in that ravaged the forests in that location and created a shortage of supplies during the third quarter July to August. As a result, the price for the wood increased by 20%. SWC, after discussions with the hotel chain representatives, revised the design of the fumiture which reduced the material requirements by 10% for the coffee table and 15% for the dining table and chairs. The production manager at SMC is responsible for procurement and production but does not participate in setting the standard costs. Required: (a) Calculate the following variances for the month of July, for both the coffee tables and the dining tables with chairs, and in total: i. Total material price planning variance ii. Total material price operational variance iii. Total material usage planning variance iv. Total material usage operational variance (19 marks)

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