Calculate the variable cost per unit and the total fixed cost using the Graphical method.
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Reton Company is reviewing the results of itts production during tthe most recent fiscal year. Due to seasonality of the business, the volume of production fluctuates during the year. Renton would like to analyze the fixed and variable costs for purposes of estimating the budget for the upcoming fiscal year. The cost accountant provided the following data:
|
UNITS PRODUCED |
TOTAL COST |
January |
1,100 |
₱12,530 |
February |
1,200 |
13,260 |
March |
1,400 |
14,720 |
April |
1,500 |
15,450 |
May |
1,800 |
17,640 |
June |
2,100 |
19,830 |
July |
2,000 |
19,100 |
August |
1,900 |
18,370 |
September |
1,400 |
14,720 |
October |
1,500 |
15,450 |
November |
1,300 |
13,990 |
December |
1,700 |
16,910 |
TOTAL |
18,900 |
191,970 |
Calculate the variable cost per unit and the total fixed cost using the Graphical method.
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- Uchdorf Manufacturing just completed a study of its purchasing activity with the objective of improving its efficiency. The driver for the activity is number of purchase orders. The following data pertain to the activity for the most recent year: Activity supply: five purchasing agents capable of processing 2,400 orders per year (12,000 orders) Purchasing agent cost (salary): 45,600 per year Actual usage: 10,600 orders per year Value-added quantity: 7,000 orders per year Required: 1. Calculate the volume variance and explain its significance. 2. Calculate the unused capacity variance and explain its use. 3. What if the actual usage drops to 9,000 orders? What effect will this have on capacity management? What will be the level of spending reduction if the value-added standard is met?Factory overhead cost variance report Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 20,000 hours for production: Tannin has available 25,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 22,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows: Construct a factory overhead cost variance report for the Trim Department for July.Lowell Manufacturing Inc. has a normal selling price of 20 per unit and has been selling 125,000 units per month. In November, Lowell Manufacturing decided to lower its price to 19 per unit expecting it can increase the units sold by 16%. a. Compute the normal revenue with a 20 selling price. b. Compute the planned revenue with a 19 selling price. c. Compute the actual revenue for November, assuming 135,000 units were sold in November at 19 per unit. d. Compute the revenue price variance, assuming 135,000 units were sold in November at 19 per unit. e. Compute the revenue volume variance, assuming 135,000 units were sold in November at 19 per unit. f. Analyze and interpret the lowering of the price to 19.