Assume industry data is your benchmark. What are the price and efficiency variances for direct materials and direct labor for each company? What is the percentage over standard by company and by variance?

Your supervisor has asked you to prepare some calculations based on the company’s data and then research publicly available similar competitor information to see how your company is performing within the industry.

Your company, CarryIt Inc., produces mass quantity, in expensive tote bags for promotional marketing purposes, which is a very competitive business.
Here is the available data for your company:

Labor hours .25;

Labor rate $11.75/hour;

Materials input .5 yds. fabric;

Materials price $1.50/yd.; and

Variable overhead rate $5.00 per direct labor hour.

You are also able to find an industry profile report via a Dun Bradstreet database that has selected data from a few other companies in similar businesses as well as some industry statistics.
Here’s the data available:

Unit Variable Cost Item                   Star Company                GoldBag Corporation                    PromoTotes LLC                                    Industry Data

Labor hours .                                        35                                         .20 .                                   30 .                                                         30

Labor rate                                            $11.25                                 $11.95                                $12.50                                                     $11.65

Materials input                                   .45 yds.                                   .675 yds.                            .50 yds.                                                   .55 yds.

Materials price                                  $1.65/yd.                                 $1.35/yd.                           $1.55/yd.                                                 $1.50/yd.

Variable OH rate                           $6.00 per direct                           25 per direct                       $4.70 per direct                                  $5.45 per direct                                                  labor hour                                  labor hour                           labor hour                                   labor hour    

For your task, in Microsoft Excel, compute the following measures:

Total variable cost per unit for CarryIt, the competitors, and the industry average.

What is the percentage of the total for each component (materials, labor, and variable overhead)?
Assume industry data is your benchmark. What are the price and efficiency variances for direct materials and direct labor for each company?
What is the percentage over standard by company and by variance?

Below the computations in Excel, summarize your observations about how CarryIt’s performance stacks up to its competition from the benchmarking exercise in 2-3 well written paragraphs. Include suggestions for areas of improvement and comments on areas where the company does well.

Submit your responses in an Excel spreadsheet, neatly organized

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