| Course | AC239 Managerial Accounting |
|---|---|
| Unit | Unit 8 |
| Paper type | Variance report |
| Length | About 550 words, 4 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC239 Unit 8
Cheaper Foam, More Scrap: A Unit 8 Materials and Labor Variance Report Against a Flexible Budget
[Student Name]
Purdue University Global
AC239: Managerial Accounting
Unit 8 Variance Report
[Instructor Name]
[Date]
Burrow Bedworks, its standards and the month's results are composite; the textbook and the performance evaluation studies cited are real.
Standard Cost Card, Large Bed
Foam: 8 pounds at $3.00 a pound, $24.00. Direct labor: 1.2 hours at $20.00 an hour, $24.00.
Flexible Budget for Actual Output
Beds produced: 2,000. Foam allowed: 16,000 pounds, $48,000. Labor allowed: 2,400 hours, $48,000.
Actual Results
Foam purchased and used: 16,900 pounds at $2.90, $49,010. Labor: 2,520 hours at $20.50, $51,660.
Materials Variances
Price variance: actual quantity times the price difference, 16,900 times ($2.90 minus $3.00), equals $1,690 F. Quantity variance: standard price times the quantity difference, $3.00 times (16,900 minus 16,000), equals $2,700 U. Total materials variance: $1,010 U, which agrees with actual $49,010 less flexible budget $48,000.
Labor Variances
Rate variance: actual hours times the rate difference, 2,520 times ($20.50 minus $20.00), equals $1,260 U. Efficiency variance: standard rate times the hours difference, $20.00 times (2,520 minus 2,400), equals $2,400 U. Total labor variance: $3,660 U, which agrees with actual $51,660 less flexible budget $48,000.
Commentary, Variance by Variance
1. Foam price, $1,690 F. Likely cause: purchasing switched in April to a lower-cost foam supplier. Owner: purchasing manager.
2. Foam quantity, $2,700 U. Likely cause: the new supplier's blocks arrived with uneven density, and cutters trimmed more scrap to meet the firmness standard. Owner: production supervisor, with purchasing.
3. Labor rate, $1,260 U. Likely cause: overtime premium on the second shift and two new sewers hired at a higher starting rate. Owner: production supervisor and human resources.
4. Labor efficiency, $2,400 U. Likely cause: the two new sewers were in their first month, and extra handling of the uneven foam slowed assembly. Owner: production supervisor.
The favorable price variance and the unfavorable quantity variance probably share one cause, the cheaper foam, so the purchasing decision that looks like a $1,690 saving has actually cost the company $1,010 on materials alone, before the extra labor.
What the Report Recommends
Before renewing the new foam contract, purchasing and production should review the month's scrap together. If the uneven density continues, the lower price does not pay for itself. The labor rate variance should fall as the overtime ends, and efficiency should improve as the new sewers gain experience; both should be watched for another month before any change to the standards. If they persist into July, the 1.2-hour standard itself should be retimed.
Using Variances Fairly
A flexible budget makes the comparison fair, because it measures what costs should have been at the output actually achieved rather than at the original plan (Franklin et al., 2019). Even so, variances are signals, not verdicts. Research on performance evaluation found that managers judged rigidly on meeting budget figures were more likely to manipulate data and feel tension with colleagues than those evaluated more broadly (Hopwood, 1972). Assigning the quantity variance only to production, when purchasing's choice caused much of it, would be exactly that kind of misreading. Work on cost system design makes a related point: standards are only as useful as the operating facts behind them (Cooper & Kaplan, 1988).
References
Cooper, R., & Kaplan, R. S. (1988). Measure costs right: Make the right decisions. Harvard Business Review, 66(5), 96-103.
Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 2: Managerial accounting. OpenStax. https://openstax.org/details/books/principles-managerial-accounting
Hopwood, A. G. (1972). An empirical study of the role of accounting data in performance evaluation. Journal of Accounting Research, 10, 156-182. https://doi.org/10.2307/2489870
Reading the AC 239 Unit 8 instructions
The eighth AC239 unit asks for materials and labor variances against a flexible budget, with causes. Start with the standard cost card for one unit. Build the flexible budget by multiplying the standards by actual units produced. Compute the materials price variance on the quantity purchased and the quantity variance at standard price, then the labor rate and efficiency variances. Label each favorable or unfavorable, and reconcile each pair to the total difference between actual cost and the flexible budget. Close with a commentary table naming a likely cause and an owner for each variance. Look for variances that share a cause. Keep the commentary specific enough that a manager could act on it. Plan for two pages, citing the textbook in APA 7.
How the AC 239 Unit 8 example is put together
The sample's cost card gives $24.00 of foam and $24.00 of labor per bed. The flexible budget allows 16,000 pounds and 2,400 hours for 2,000 beds. Actual results show 16,900 pounds at $2.90 and 2,520 hours at $20.50. The materials block computes $1,690 F and $2,700 U and reconciles to $1,010 U. The labor block computes $1,260 U and $2,400 U and reconciles to $3,660 U. A four-row commentary names a new foam supplier, uneven density, overtime and new hires, with owners in purchasing, production and human resources. The highlighted sentence links the two foam variances to one decision. Recommendations and a section on using variances fairly, citing research on budget-based evaluation, close the report.
AC239 Unit 8 rubric: what earns full points
Variance reports are graded on correct formulas, correct favorable or unfavorable labels and pairs that reconcile to the total. The flexible budget must use actual output, not the original plan. The price variance should be computed on quantity purchased where the problem says so. Causes should be specific and plausible, and owners should match the causes. Recognizing that two variances share a cause earns interpretation credit. Commentary that avoids blaming the wrong department shows judgment. Clear blocks and consistent labels help graders. Correct APA 7 citations complete the assessment for this unit, and a variance report that names an owner for every line tends to score above one that lists causes without them.
Common AC239 Unit 8 mistakes, and how to avoid them
The most common variance error is building the budget at planned output instead of actual output, which mixes volume effects into every variance. Others reverse the favorable and unfavorable labels. The quantity variance is priced at actual price. Labor rate and efficiency are swapped. Causes are generic, such as inefficiency, with no owner. Linked variances are treated separately, so a costly purchasing choice looks like a saving and the production floor absorbs blame for scrap it did not cause. With your standard cost card and actual results in front of you, our team can prepare the report and commentary for your section.
Get an AC239 Unit 8 example written to your instructions
Send the standard cost card, the actual quantities and prices, and the units produced in Unit 8, plus the rubric and any required layout for the commentary. The full report comes back inside 24-48h with causes that suit the problem's own scenario, and the first custom sample is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC239 Unit 8 questions, answered
Should overhead variances be included?
Only where the problem asks. Many AC239 variance problems stop at materials and labor, and overhead variances, spending and efficiency for variable overhead, budget and volume for fixed, follow later or not at all. When included, they get their own block in the same layout, and the volume variance carries a note that it reflects capacity use rather than spending.
Why is the price variance computed on quantity purchased?
Because the purchasing decision happens when material is bought, and isolating the price effect at that point lets the purchasing manager see it immediately rather than months later when the material is used. The consequence is that the price and quantity variances may not sum to one total when purchases differ from usage, which the sample notes rather than forcing a match.
How specific should the causes be?
Specific enough that a manager could act on them. Inefficiency is a label, not a cause; a new operator on the second shift running the cutter at a slower setting is a cause, even as a hypothesis. The sample phrases causes as likely explanations to be confirmed, names who would confirm each, and avoids blaming a person on the evidence of one number.
Where can I find a free AC239 Unit 8 sample paper?
You can read a complete AC239 Unit 8 variance report on this page, computing foam and sewing labor variances against a flexible budget for 2,000 beds, with causes and owners.
Was the cheaper foam a good decision in the AC239 Unit 8 sample?
Not yet. It saved $1,690 on price but probably caused the $2,700 quantity variance through extra scrap, a net cost of $1,010 before any labor effect, so the contract should be reviewed.