Peterson Pottery Case Study
Dear Peterson Pottery, Here are the variances explaining the Clay and Glaze operations. By knowing the variances, we can paint a picture to see what is going on within those operations. Here you will find the picture of Clay Materials and Labor, Glaze Material and Labor, Variable and Fixed Overhead. By analyzing the data, shown by the variances, there are some issues that must be brought to attention. By taking time to analyze the data and devising a plan will help your business save on costs and increase the operations along with quality of the business. First off, I want to bring your attention to the Clay Department. Seeing that you bought cheaper clay, but more lbs. then expected, I would like to know why. Was it cheaper clay? Was there a deal on the price? I’m assuming that it was cheaper clay because of the fact that the clay bought was cheaper than expected. I believe that because this was cheaper clay, it was inferior clay then a more expensive one. Since the quality was low, the workers might have had a hard time working with the clay and therefore used more to create the same level of the product then if a more expensive (quality) clay was used. That is why you have an unfavorable quantity variance for Clay in labor. It seems that there is the same problem within the Glaze department. The company has spent more for the glaze materials however; the workers have used more time to work on the product (this also is a factor within the Clay Labor variance). Because they are using more time, more costs are being incurred. But because they are using more time, they might be using more clay or glaze to complete the products. I believe the overall factor leading to these unfavorable variances is the efficiency of work being done. The workers need to be using less time to complete the goal of products. In this