Basuras Waste Disposal Company Basics of Variance Analysis

Problem 10-40  Basics of Variance Analysis, Variable Inputs

Basuras Waste Disposal Company has a long-term contract with several large cities to collect garbage and trash from residential customers. To facilitate the collection, Basuras places a large plastic container with each household. Because of wear and tear, growth, and other factors, Basuras places about 200,000 new containers each year (about 20% of the total households). Several years ago, Basuras decided to manufacture its own containers as a cost-saving measure. A strategically located plant involved in this type of manufacturing was acquired. To help ensure

cost efficiency, a standard cost system was installed in the plant. The following standards have been established for the product’s variable inputs:

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