and by comparing activity based costing with the cost systems they already using, looking for a way in which they can be more competitive on the market. Cover page Table of Content 1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing
Leslie M. Rogakis HCA 240-0500 03/29/2015 Professor Tirizia York Variance Analysis A variable department manager has many factors to consider when interpreting and analyzing a variance report. Variances can be attributed to factors such as increased or decreased volume, wage increases, cost increases for equipment and cost increases for supplies. Variance reports are a tool that can be utilized to analyze how well a company is doing with meeting current budgetary goals as well as a means for forecasting information for future budgets. In preparing a variance analysis report to be presented to the vice president, the information needs to be simple enough to understand easily, but detailed enough for the information to be useful to
Units of goods for direct materials, direct labor, manufacturing overhead, and variable selling expenses all faired favorable variances and poses no concerns for the company as revenues are greater than budgeted. Corrective actions in these areas should be investigated, as employees may be performing tasks more efficiently and therefore managers can apply these efficiencies elsewhere in unfavorable variances.
It was a freezing night, with snow glazing over the three-hundred and sixty foot field. The previously undefeated Patriots stood like goliath, immune to death glares and “boos” echoing around the Denver stadium. The swirl of the snow made it difficult to see exactly where the ball was, but near the end of the night, it was clear that the Broncos would soon defeat their giant, all the while being lead by an intrepid, young quarterback. This astonishing win wasn’t just a victory for the Broncos, but for Brock Osweiler as well.
Per Unit Total for 10 Bracelets Incremental revenue $349.95 $3,499.50 Incremental costs: Variable costs: Direct materials $143.00 1,430.00 Direct labor 86.00 860.00 Variable manufacturing overhead 7.00 70.00 Special filigree 6.00 60.00 Total variable cost $242.00 2,420.00 Fixed costs: Purchase of special Total budgeted manufacturing overhead for the year (a) $175,700 Total budgeted direct labor-hours for the year (b) 20,400 Manufacturing overhead rate for the year (a) ÷ (b) $ 8.61 Problem 5 1. The activity variances are shown below: Air Meals Activity Variances For the Month Ended December 31 Planning Budget Flexible Budget Activity Variances Meals 20,000 21,000 Revenue ($3.80q) $76,000 $79,800 $3,800 F Expenses: Raw materials ($2.30q) 46,000 48,300 2,300 U Wages and salaries ($6,400 + $0.25q) 11,400 11,650 250 U Utilities ($2,100 + $0.05q) 3,100 3,150 50 U Facility rent ($3,800) 3,800 3,800 0 Insurance ($2,600) 2,600 2,600 0 Miscellaneous ($700 + $0.10q) 2,700 2,800 100 U Total expense 69,600 72,300 2,700 U Net operating income $ 6,400 $ 7,500 $1,100 F 2. Management should note that the level of activity was above what had been planned for the month. This led to an expected increase in profits of $1,100. However, the individual items on the report should not receive much management attention. The favorable variance for revenue and the unfavorable variances for expenses are entirely caused by the increase in activity.
This was favorable, but the Efficiency Variable was 100,000 unfavorable. This suggest that Competition Bike received a great price, but with the unfavorable Efficiency there were a lot of left over materials suggesting the material might not be the best quality. Direct Labor had a 150,000 Unfavorable Variance, but had a 50,000 favorable Efficiency Variance. The labor cost was up due to the high skill level needed for the bike manufacturing. The 50,000 favorable Efficiency Variance enabled the high skill labor to perform the task very efficiently. The Manufacturing Overhead had a 24,000 unfavorable Price Variance, and a 2426 unfavorable Efficiency Variance. The Advertising Cost had a 5,000 unfavorable Price Variance and a 1246 favorable Efficiency Variance. This suggest that Competition Bike spent more on Advertising in order to boost lagging sales, and the favorable Efficiency Variance shows that even though more was spent than budgeted, the money spent was efficient and worth the increase. The Transportation Out had a 3207 unfavorable Price Variance and a 2400 unfavorable Efficiency Variance. This suggest that Transportation cost were up due to increased fuel cost, and this increase in cost resulted in unfavorable Efficiency Variance due to transporting fewer bikes with increase in fuel cost.
Lets take a look at the expenses listed under “general and administrative” on the horizontal analysis worksheet. These particular expenses are costs a business incurs when performing normal operations. For years six and seven there was an increase of a little over 20%, or approximately 156 thousand dollars. Then in years seven and eight there was another slight increase. In order to maintain consistent or increased profits without raising prices and/or selling into new markets in order to increase sales figures, a business would have to cut expenses.
MANAGEMENT AND FINANCIAL INFORMATION FOR DECISION MAKING MANAGEMENT AND FINANCIAL INFORMATION FOR DECISION MAKING Maria del Mar Sanchez: 10044329 Tutor: Geraint Evans Maria del Mar Sanchez: 10044329 Tutor: Geraint Evans Contents INTRODUCTION 2 INTERNAL AND EXTERNAL USERS 3 Customers 3 Competitors 3 Shareholders² 4 Managers 4 Suppliers 4 Employees 5 OBJECTIVES 6 Maximize shareholders wealth 6 Growth 6 Satisfaction 7 Profit maximization 7 Maximize sales 7 Ratios Analysis 9 Return on Shareholders’ Funds (%) 9 Return on Capital Employed (%) 10 Stock Turnover (x) 11 Current and liquidity ratio (x) 12 Gearing (%) 12 BUDGETING 14 CONCLUSION 17 REFERENCES 18 INTRODUCTION This makes the company look good and they can afford to do this from good financial skills. Decisions like this make a good profit in the long run and all in all this is why it is so important to have a good management team.
Develop and diagram an activity based cost model using the information in the case. Provide your best estimates about the cost and profitability of Wilkerson’s three product lines. What difference does your cost assignment have on reported product costs and profitability? What causes any shifts in cost and profitability?
The information used to calculate the total direct material and total direct labor variances are retrieved from the cost/ price variance and efficiency variance data. The material variance is zero, meaning there have been no changes for the cost of materials. The labor variance was favorable due to a fall in the labor rate. The efficiency variance for direct labor tells management how efficient the direct labor was in making the actual output that was produced by the direct labor. With that being said, in this case it is considered unfavorable. This is because, both the labor rate and efficiency of the labor has been reduced. The areas that should be reviewed at Peyton Approved include product design, reduction of scrap,
Question 1: Using budget data, how many motors would have to be sold for Waltham Motors Division to breakeven? In order to calculate the breakeven point, we use the following equation and budget data: Breakeven Sales*Unit Price-Unit Variable Cost= Fixed Costs Breakeven=Fixed CostsUnitary Price-Unitary Variable Cost Breakeven point=260,000864000/18000-512800/18000=13,226 units Q2. Using budget data, what was
Dakota Office Products Case Analysis BUSA 5061: Accounting For Managerial Decision-Making November 4, 2010 The following analysis is written for Dakota Office Products to evaluate current business operations and recommend future actions necessary to ensure company success. In our analysis of the company we will identify inefficient business practices that have led to the companies first profit loss in its history. We will evaluate the company’s current pricing structure, ordering methods, shipping and delivery process, and deficiencies in cash flows.
From the aspect of cost center, tracking information of cost expenses would facilitate management to figure out the productivity by an unbiased measurement. In operations, company units such as the human resources department or marketing department, except sales department, are not engaging in market share or generating revenues. In contrast, these departments contribute their capabilities for internal supports and help sales department turn profits to the company. Those efforts are a part of product costs and also are a norm for performance evaluation.
Goal The goal of traditional accounting practices is to achieve the lowest possible cost per unit by maximizing employee and equipment productivity. However, the goal of the plant’s
Why should organisations collect, file and maintain accurate financial records? To have a record of how the business is running. This allows us to determine how the business is sitting financially and display what money is going where and whether there is room for improvement. Basically, it is used to