Essay about Waltham Motors

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Waltham Motors Case Individual Analysis
Measurement I
Kofi Opoku
October 11, 2010
Professor Brett Hunkins

Company Background:
Waltham Motors Division is a wholly owned subsidiary of Marco Corporation. The company manufactures electric motors of a single design which are usually purchased by household appliance manufacturers. The company was later acquired in 2003 by Marco Corporation. Prior to the acquisition, it was a family business.

Problem: Sharon Michaels, who happened to be appointed as division controller for the company was concerned about the financial report of May, 2004, given to her by the plant accountant. The report indicated huge variance discrepancies between the budgeted profit ($91,200) and the actual outcome
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According to him, actual direct labor had been $8.20 per hour due to increase in medical benefits since January. He also stated that Actual material prices have been 5% less than expected. Based on such information, I calculated the actual costs per unit, taking into consideration the differences it had on direct material and direct labor. However, it is important to note that the fixed costs stay the same. The variable and fixed costs per unit for the actual costs column are as follows:
Variable Cost per Unit Fixed Cost per Unit Direct Material $5.70 Supervision $ 3.20 Direct Labor $16.40 Rent $ 1.11 Indirect Labor $3.17 Depreciation $ 3.33 Idle Time $1.01 Other $ 0.58 Cheap Time $0.71 Selling & Admin $ 6.22
Miscellaneous Supplies $0.29
Shipping Cost $2.00 Total Variable Costs $29.28 per unit Total Fixed Costs $14.44 Based on the per unit cost calculations for what actually occurred, the total variable per unit costs was $29.28, and the fixed per unit costs was $14.44. This shows that the total expected per unit costs for the actual cost was $43.72. This however, is different from the initial calculation I had. I will explain that in the subsequent questions.

3. Comment on the performance report and the

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