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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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- Question 4 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…Q2. Swagelok Enterprises is a manufacturer of miniature fittings and valves. Over a 5-yearperiod, the costs associated with one product line were as follows: first cost of $20,000, andannual costs of $18,000. Annual revenue was $26,000 and the used equipment was salvagedfor $4,000. What rate of return did the company make on this product? The rate of return that the company made on the product is %.Question 5 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…
- Question 7 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…Question 1 Flounder Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Flounder’s monthly manufacturing cost and other expense data are as follows. Rent on factory equipment $12,000 Insurance on factory building 1,780 Raw materials used (plastics, polystyrene, etc.) 80,800 Utility costs for factory 920 Supplies for general office 320 Wages for assembly line workers 59,700 Depreciation on office equipment 830 Miscellaneous materials (glue, thread, etc.) 1,470 Factory manager’s salary 6,200 Property taxes on factory building 490 Advertising for helmets 14,900 Sales commissions 10,900 Depreciation on factory building 1,640 Prepare an answer sheet with the following column headings.Enter each cost item on your answer sheet, placing the dollar amount under…Question 11 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…
- QUESTION 7 Classify Costs Following is a list of various costs incurred in producing replacement automobile parts. With respect to the production and sale of these auto parts, classify each cost as variable, fixed, or mixed. 1. Cost of labor for hourly workers 2. Factory cleaning costs, $6,000 per month 3. Hourly wages of machine operators 4. Computer chip (purchased from a vendor) 5. Electricity costs, $0.20 per kilowatt-hour 6. Metal 7. Salary of plant manager 8. Property taxes, $165,000 per year on factory building and equipment 9. Plastic 10. Oil used in manufacturing equipment 11. Rent on warehouse, $10,000 per month plus $25 per square foot of storage used 12. Property insurance premiums, $3,600 per month plus $0.01 for each dollar of property over $1,200,000 13. Straight-line depreciation on the production equipment 14. Pension cost, $1.00 per employee hour on the job 15. PackagingAccounting A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs that are currently used cost $42.70 per bulb and last 14,500 hours before burning out. The new bulb (at $57.3 per bulb) provides the same amount of light and consumes the same amount of energy, but it lasts twice as long. The labor cost to change a bulb is$14.00. The lights are on 20 hours a day, 365 days a year. (Assume that the firm's marginal tax rate is 25%.) If the firm's MARR is 16%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? Round the service life of the old bulb to the nearest whole number..Question 2Coffee works Limited manufactures coffee machines for domestic use. The management of the company is considering next year’s production and has asked you to help with certain financial decisions. The following information is available:Selling price (per machine) £80Direct materials (per machine) £25 Direct labour (per machine) £20 Fixed production overheads £270,000 per year.The company is planning to manufacture 15,000 coffee machines next year.(a) calculate the marginal cost per coffee machine(b) calculate the absorption cost per coffee machine (c) prepare a statement of profit or loss (under marginal and absorption costing method) to show the profit or loss if 15,000 coffee machines are sold
- Algo Identifying upstream and downstream cost LO During year 2, Thornton's manufacturing company incurred $115,200,000 of research and development (R&D) cost to create a long-life battery to use in computers. in accordance with FASB standards, the entire R&D cost was recognized as an expense in year 2 manufacturing costs ( direct materials, direct labor, and overhead) are expected to be $60 per unit. Packaging shipping, and sales commissions are expected to be $17 per unit. Thornton expects to sell 2,4000,000 batteries before new research renders the battery design technologically obsolete. During year 2, Thornton made 432,000 batteries and sold 407,000 of them Required a) Identify the upstream and downstream costs b) Determine the year 2 amount of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP c) Determine the sales price assuming that Thornton desires to earn a profit margin that is equal to…Question 23 You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021. R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Overheads: Admin 4.00 Rent 7.50 Rates…QUESTION 4 Lusakasa Corporation produces baseball bats for kids that it sells for $32 each. At capacity, the company can produce 50,000 bats a year. The costs of producing and selling 50,000 bats are as follows. Cost per Bat Total Costs Direct materials $12 $600, 000 Direct manufacturing labour 3 150,000 Variable manufacturing overhead 1 50,000 Fixed manufacturing overhead 5 250,000 Variable selling expenses 2 100,000 Fixed selling expenses 4 200,000 Total costs $27 $1,350,000 Suppose Lusakasa is currently producing and selling 40,000 bats. At this level of…