1. How would a coffee shop use labor and materials variance information?
2. Kyle's Products estimates the following selling expenses next period:
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Salaries (fixed)
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$ 30,000
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Commissions (0.5%of sales revenue)
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17,875
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Travel (0.03% of sales revenue)
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10,725
|
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Advertising (fixed)
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60,000
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Sales Office Costs ($3,750 plus $0.05 per unit sold)
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7,000
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Shipping Costs ($0.10 per unit sold)
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6,500
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Total Selling Expenses
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132,100
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Derive the cost equation (y = a + bx) for selling expenses. (Hint: y = a + bx + cy.)
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Assume that Kyle's actually sells 50,000 units during the period at an average price of $6 per unit. The company had budgeted sales for the period to be: volume, 65,000 units; price, $5.50. Calculate the sale price and volume variance.
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The actual selling expenses incurred during the period were $80,000 fixed and $30,000 variable. Prepare a profit variance analysis for sales revenue and selling expenses.
3. The Rockland Candy Company presentas the following data for October:
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Standards per Batch
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Actual Total
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Materials
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1 pound at $2.50 per pound
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49,000 Pounds
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Labor
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1.5 Hours at $3.00 per Hour
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70,000 Hours
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Batches Produced
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48,000 Batches
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During the month, the firm purchased 49,000 pounds of materials for $127,500. Wages earned were $214,000. Compute the labor and material variances.