CMP Final Review SOLUTION

# CMP Final Review SOLUTION - SOLUTION QUESTION#1 36 marks...

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12 SOLUTION QUESTION #1 36 marks Required: PART A 1. Assuming that Ruby uses Absorption Costing, and wants to price her product at total standard costs plus 25 % for profit. What price should Ruby set per rack? DM tubing 4 x 4 feet x\$10 160 DM clamps 4 clamps x \$65 260 DL (4.5 + 2.0) x \$20 130 VOH 55 FMAO \$136,500 = \$30/DLH 4550 6.5 x \$30/dlh 195 \$800 25% markup 200 Selling price \$1,000 PART B 1. It is the end of the year and Ruby is interested in determining variances for her total labour and direct materials. A few things came to light during the year that she expected would affect how she performed compared to her standards. Throughout the year she discovered that the carbon alloy tubing was sold in 6-foot lengths only, requiring her to cut off 2 feet from each piece. Luckily, because of her volume of purchasing, she was only charged \$9 per foot for each foot purchased. . She also made some errors in her purchasing the clamps and ended up with 100 extra clamps as inventory and failed to notice that they had delivery charge of \$5 per clamp because they came from Europe. Secondly, she realized that she had failed to account for the fact that the fast drying paint still required 1.0 in the middle of the manufacturing process. Since they work on one project at a time, they could not be productive during this period. Calculate the materials price variance for the tubing and the clamps, the materials quantity variance for the tubing, and the labour efficiency variance materials quantity variance clamps AQu x SR = (750 units x 4) + 100) x \$65 = 201,500 LESS: SQu x SR = (750 units x 4) x \$65 = 195,000

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13 Variance U \$ 6,500 materials quantity variance Tubing AQu x SR (750 units x (4 x 6 ft) x \$10 \$180,000 LESS: SQu x SR (750 units x (4 x 4 ft) x \$10 \$120,000 Variance U \$60,000 materials price variance tubing AQp x AR = (750 units x( 4 x 6ft)) x \$9 = 162,000 LESS: AQp x SR = (750 units x (4 x 6 ft) x \$10 = 180,000 Variance F \$18,000 labour efficiency variance AH x AR 750 x (4.5 + 2.0+1.0) x \$20 \$112,500 LESS: SH x SR 750 x (4.5 + 2.0) x \$20 \$ 97,500 Variance U \$15,000 labour rate variance AH x AR 750 x (4.5 + 2.0+1.0) x \$20
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## This note was uploaded on 01/03/2011 for the course COMM 290 taught by Professor Brian during the Winter '09 term at UBC.

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CMP Final Review SOLUTION - SOLUTION QUESTION#1 36 marks...

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