Mile High Bicycles

Executive Summary Bob Moyer founded Mile High Cycles, (MHC) a play along specializing in high-quality, handcrafted mountain bikes. During a condemnation when sales for otherwise types of bikes were declining, nationwide demand for mountain bikes was growing. In 2004, MHC was able to forgather the additive demand for mountain bikes and had unwrapd 800 more than(prenominal) bicycles than originally plan; however, Bob wondered if be at MHC were organism managed effectively. Due to the amplify in production in 2004, thither are twain direct approach and overhead variances when evaluating real(a) cost against supple work outed cost. Using a flexible budget is more straight in this instance as it captures the change in evaluate production from 10,000 to 10,800 bikes. Variance Analysis Implications and possible Causes pull up fabrication Department There is a favorable cost variance in the frame assembly department of well-nigh $82,663 when comparing actual costs to flexible budgeted costs. Steel electron tube has a thoroughgoing adverse variance of $8,100. The original budget for 2004, estimated the cost of vane tubing at $30.00 / lb. Actual costs were $31.50 / lb.

, which whitethorn allude unanticipated price growths (for example an increase in commodity prices since vane is a commodity), or high costs for additional orders of trade name required to correspond the increased production demand. Although steel price variance was unfavorable, we cope with a positive furbish up from expertness variance, as only 3% more steel (113,400 vs. 100,000 lbs.) w as required to produce 8% more output (10,80! 0 vs. 10,000 bikes). tonality has a entireness unfavorable variance of $1,187. Paint ca apply an unfavorable variance from twain a price and efficiency standpoint. high costs delinquent to smaller, additional orders of paint required to meet demand may have driven paint costs higher, while efficiency may have been negatively impacted by paint that was purchased and not used (assuming paint is purchased in large containers and used in a continuous...If you fatality to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper