Final Answer:
Sesnie Company uses standard costing. Tim Alderman, the new president of Sesnie Company, is presented with the following data for 2017.
Explanation:
Standard costing is a method that sets predetermined costs for direct materials, direct labor, and overhead, allowing for a comparison between actual costs and expected costs. In the scenario presented to Tim Alderman, the data provided would typically include the standard costs for various inputs (materials, labor, overhead) and the actual costs incurred during 2017. The comparison between the actual and standard costs enables the company to identify variations and assess performance. To delve deeper, the data likely consists of actual quantities used or produced, standard prices or rates, and actual prices or rates. The computation involves analyzing the differences between actual and standard quantities and prices for materials, labor, and overhead.
Tim Alderman, as the new president, would need to evaluate the variances—material, labor, and overhead—to understand the reasons behind any discrepancies between actual and standard costs. Variances can be favorable or unfavorable, signifying whether costs were lower or higher than expected. Analyzing these variances helps in decision-making processes, such as cost control, performance evaluation, and taking corrective actions if required. For instance, if actual materials used exceed the standard quantity, Alderman would want to investigate the reasons behind this discrepancy, which could range from inefficiencies in production to changes in material prices.
This data offers critical insights into the company's operational efficiency and cost management. Tim Alderman's role would involve analyzing these variations to pinpoint areas for improvement and make informed strategic decisions aimed at optimizing costs and enhancing overall performance in subsequent periods.