Essay about Cost Accounting Analysis

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3.0 Variance Analysis
3.1 Flexible-Budget Variance Analysis
In Barnes Scuba Diving case, the main comparison for the flexible-budget variance analysis would be between the actual results and flexible budget. Static budget would not be useful for this comparison due to the different sales unit output which may result in a misleading and inaccurate result comparison.
With reference to the Flexible Budget Section attached in Annex X, Flexible-Budget Variance for Revenues was identified to be a favourable variance of $50,400 due to the fact that there was an increase of 216 participants on top of the budgeted 1800 participants and also an additional increased in course fee of $25 on top of the budgeted $350(selling price per unit). This
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This resulted in more resources to be consumed, an additional 504 (25%x2, 016 units) manuals cost to be incurred, which resulted in the unfavourable quantity variance ($6,048). An actual cost of $4788 (504 units X$2.50) was incurred due to the manuals being replaced free of charge. Barnes had to bear responsibility to replace them free of charge as the low quality manuals were due to Barnes’ decision to use cheaper printer. In this case, Barnes was still able to absorb the cost of replacing the manuals free of charge as the total savings from using the cheaper printer is more than the total cost of replacing. In the long run, Barnes may also have to consider if customers value of this manual, which was not mention in the case. If customer does not value the manual and Barnes can keep up with the cost of replacement, then using the cheaper printer may ultimate be an advantage to Barnes. This would be the trade-off that Barnes would have to consider for using cheaper quality printer. Dive Logbooks
The unfavourable price ($1854.40) and quantity ($2419.20) variances of dive logbooks were caused mainly by the additional 302 logbooks being consumed and increase cost of $0.80 per logbook. The increase cost from the standard cost $8 was controllable by Barnes and justified with the improve quality of the logbook. This
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