--%>

Planned product cost and the actual cost

A company has production facilities in several countries. Some of the products they sell are produced in stages (Raw Materials -> Pre-Assembly -> Assembly -> Finished Product) based on the technologies and materials involved (see Table 1).

Based on the exchange rate information provided below calculate the following:

1. The difference between the planned product cost and the actual cost?

2. What was the impact on Sales and Profit?

Table 1: Production Scenarios

Product

Pre-Assembly

Assembly

Country Sold In

Units Sold

 A

US

Mexico

Europe

150,000

 B

Mexico

US

China

600,000

 C

Canada

Japan

Korea

75,000

Table 2: Planned Costs and Revenue (per Unit in USD)

Product

Raw Materials

Pre Assembly

Assembly

Total cost of goods

Sale Price

Plan Gross Profit

A

$ 100USD

$ 250 USD

$ 50 USD

$ 400 USD

$ 900 USD

$ 500 USD

B

$ 150

$ 50

$ 175

$ 375

$ 675

$ 300

C

$ 75

$ 300

$ 250

$ 625

$ 1,200

$ 575

Table 3: Exchange Rates Applied at each stage (1 USD buys: X of Target Currency)

Table 3: Exchange Rates Applied at each stage (1 USD buys: X of Target Currency)

Currency

Raw Materials

Pre Assembly

Assembly

Cost of goods

Points of Sales

USD

 1:1

1.0000

1.0000

1.0000

1.0000

Yuan (China)

1:6,2190

6.2190

6.219

6.7400

6.2197

Peso

1: 12,586

12.992

13.035

13.456

13.409

Canadian Dollar

1:0.986

0.9830

0.9810

0.9999

1.1500

Yen

1: 89.995

90.000

89.999

89.132

90.750

Wou (Korea)

1, 057.8

1.058.1

1.058.5

1.058.8

1.060.0

Euro

1: 0.730

0.7820

0.8010

0.7530

0.7270

 

 

   Related Questions in Managerial Accounting

  • Q : What do you mean by the term Mission

    What do you mean by the term Mission statements? Briefly describe it.

  • Q : Threats to business comprises Write a

    Write a brief note on the things which Threats to business comprises?

  • Q : Define Cost Object Cost Object (also

    Cost Object (also referred to as Cost Objective): It is an activity, item, or output whose cost is to be computed. In a wide sense, a cost object can be an organizational division, task, a function, product, service, or a customer.

  • Q : Define Avoidable Cost Avoidable Cost :

    Avoidable Cost: The cost related with an activity which would not be acquired if the activity were not executed.

  • Q : Define Estimated Cost Estimated Cost :

    Estimated Cost: The procedure of projecting a future outcome in terms of cost, based on information accessible at the time. The estimated costs, instead of actual costs, are at times the basis for credits to work-in-process accounts a

  • Q : What is a Product Product : Any

    Product: Any traceable, discrete, or measurable good or service given to a customer. Frequently goods are termed to as tangible products, and services are termed to as intangible products. A good or service is the product result of a procedure resulta

  • Q : Break-even point The operating level at

    The operating level at which the total sales revenue equals the total cost. Total sale revenue is equal to the price per unit times the number of units sold. Total cost equals total variable cost, the number of units sold in time the variable cost per unit and the tot

  • Q : Explain Full-Absorption Costing

    Full-Absorption Costing: It is a technique of costing that assigns (or absorbs) all labor, material, and service or manufacturing facilities and support costs to products or another cost objects. The costs assigned comprise those which do and do not d

  • Q : What is Outputs Outputs : Any product

    Outputs: Any product or service formed from the consumption of resources. This can comprise information or paper work produced by the completion of the tasks of an activity.