2011%20Solutions%20to%20Practice%20Questions%20Students

2011%20Solutions%20to%20Practice%20Questions%20Students -...

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1 Solutions to Practice Questions for the ACCT2522 Final Exam Please note that some information in the answers to the questions may not be relevant to you as the course has changed over the years. Question 1 [10 marks in total] (a) item identified (a) explaining any of the two NVA identified (b) one root cause for each NVA (c) Storing materials Resources spent in housing other idle resources. Does not contribute to product. If inventory management practices are in place, the need to store materials would be minimal. Unreliable suppliers resulting in inconsistent supply. Inflexible suppliers unable to deliver at short notice. Unable to predict production requirements accurately. Assess quality of recommendations: reference to appropriate method of reducing activity costs. reference to appropriate type of improvement. good recommendation. Material Handling and movement Doesn’t contribute to the production of the product – resource spent simply in shifting materials from one point to the next. Factory layout. Inadequate infrastructure for efficiently moving materials around. Inspect and test helmet Cover for fixing problems elsewhere (upstream activity quality issues). Poor quality control in production area. Poor quality materials Inexperienced production staff.
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2 Question 2 [35 marks in total] – This is the solution relating to the lecture exercise. Question 3 [28 marks in total] Required: Data provided: Standard DM (see below) [note 1] 0.2 Sq m DL 0.5 hr DL rate ($20 plus 25% on costs) $25 DM price $35 Thus DL allowed (0.5*1800 units) 900 Actual DM Purchased 440 sq m DM Used 396 sq m DL Used 910 hrs Actual DM price $34 DL rate 30 [note 1] std material is 0.16 sq metres; but scrap is 20%. Thus for 1800 units we need 360 sq metres. Thus need input = 0.16/0.8 = 0.2 sqm (a) Variance Analysis [12 marks] For each answer, deduct 0.5 mark if no F or UF. Direct labour rate variance = AR*AH - SR*AH = 4,550 U - (1 mark for calculating direct labour rate: $20*1.25 = $25 Direct labour efficiency variance = SR*AH - SR*SH = 250 U Direct materials usage variance = SP*(AQ-SQ) = 1,260 U (1 mark for calculating SQ – see note 1 above) Direct material price variance = AQ*(AP-SP) = $594 F (b) Provide one likely explanation each for the direct material usage variance and the direct labour rate variance you calculated in requirement (a). [3 marks] Allow for carry over mistakes.
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3 DM usage: Used more scrap than planned, possibly due to greater rework (confirmed by unfavourable labour variance) (allow for other logical explanations) DL rate: Changes in class/experience of labour used. (allow for other logical explanations). Question 4 [12 marks in total]
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2011%20Solutions%20to%20Practice%20Questions%20Students -...

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