Q1. Monument Golf Markers produces granite tee box signs. These monuments are etched with an image of the golf hole, distance to green, and other information. Each monument typically requires 1,200 pounds of granite. The standard cost for granite is estimated at $260 per ton (2,000 pounds). During a recent month, 600 monuments were constructed. The company purchased and used 350 tons of material at a cost of $275 per ton.
Compute the total variance for materials, and determine how much is related to price and how much is related to quantity.
Q2. Custom Clubs produces handmade golf clubs. The process is labor intensive. The speed at which a club can be built depends on the skill level of the individual worker. Management has established a standard of 2 labor hours per club. The standard wage rate is $12 per hour. During a recent month, 2,500 custom clubs were produced. Management was pleased that only 4,900 labor hours were worked; however, total wages amounted to $63,700.
Compute the total variance for labor, and determine how much is related to rate and efficiency components.
Q3. At the beginning of the year, Blue Bird Manufacturing estimated that its annual variable factory overhead would be $405,000, and its fixed factory overhead would be $891,000. The company's payroll consisted of 15 direct labor employees, and each was expected to work 1,800 direct labor hours. Blue Bird applies overhead to products based on direct labor hours. Each finished unit produced by the company is anticipated to require three direct labor hours.
Actual production and cost information for the year is as follows:
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Total units produced
|
8,900
|
|
Actual variable overhead
|
$395,000
|
|
Actual fixed overhead
|
$910,000
|
|
Actual labor hours
|
26,900
|
(a) Compute the variable overhead variances..
(b) Compute the fixed overhead variances.
Q4. Victoria Falls Flour Mill Company started many years ago producing a single product. It has grown to produce many diverse consumer products ranging from foods to paper goods. Currently, the corporation is barely making a profit, and the price of its stock has languished. Division managers have traditionally been incentivized with stock options and awards. However, management is evaluating a new bonus plan based on segment profits within each division. Below are 20X4 facts about the Sugar Products Division, which generates 10% of overall corporate revenue. The Sugar Products Division has two key products - raw sugar and candy.
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Total sales of raw sugar and candy
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$45,750,000
|
|
Traceable, controllable, sugar division fixed costs
|
10,250,000
|
|
Traceable, uncontrollable, sugar division fixed costs
|
3,600,000
|
|
Non-traceable, controllable, sugar division fixed costs
|
1,500,000
|
|
Non-traceable, uncontrollable, sugar division fixed costs
|
1,750,000
|
|
Variable selling, general, & administrative costs
|
9,050,000
|
|
Variable product costs
|
21,700,000
|
|
General corporate expenses for all divisions
|
8,000,000
|
Prepare a contribution income statement for the aggregated Sugar Division (one column). If the division manager is to be evaluated on controllable contribution margin, would the Sugar Division manager appear to be entitled to a bonus?
Q5. Downhill Manufacturing produces snow skis in a two-step production process - cutting and laminating. The manufacturing center is supported by two service centers - a health clinic and a janitorial service. The following table reveals certain facts about each activity:
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Health clinic
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Janitorial service
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Cutting department
|
Laminating department
|
|
Employees
|
2
|
4
|
10
|
15
|
|
Square footage
|
1,200
|
600
|
12,000
|
8,000
|
|
Cost incurred
|
$180,000
|
$125,000
|
$700,000
|
$800,000
|
(a) Using the direct method, allocate the service department costs to production. The clinic costs are to be allocated based on employees, and the janitorial costs are to be allocated based on the square footage.
(b) Using the step method, allocate the service department costs to production. The clinic costs are to be allocated based on employees, and the janitorial costs are to be allocated based on the square footage. The first step will be to allocate clinic costs. The clinic employees maintain their space and do not rely upon the janitorial service. However, janitorial employees occasionally sustain an injury and utilize the clinic.
Attachment:- Assignment Files.rar