6A:130 – Fall 2007 Quiz 9 & 101 of 8 QUIZ 9 & 10:This quiz is worth 20 points total. It will be subdivided into two 10 point quizzes. This is due in my office by 4:00pm on TUESDAY, NOVEMBER 27. Solution will be available at 5:00pm on Tuesday (11/27).To receive credit you must show your work. STU Company is a manufacturer of high-end walking/hiking staffs. They make the sticks out of two types of material – titanium and aluminum. The owner of the company is pleased that they made a profit; however, she is curious as to what caused the operating income to be $845,000 lower than plan. In addition, she would like your suggestions on the underlying causes of the variances and a course of action for improvement. ActualBudgetDifferenceSales revenue5,130,000$ 5,600,000$ 470,000$ UCosts4,795,0004,420,000375,000UOperating profits335,000$ 1,180,000$ 845,000$ UAdditional detail information follows: STU CompanyBudget & Actual data for the year ending June 30Master DescriptionBudgetActualMarket size80,00060,000Market share25%30%Sales volume20,00018,000TI Staffs4,0005,400AL Staffs16,00012,600Total sales volume20,00018,000Selling price:TI Staffs400.00$ 390.00$ AL Staffs250.00$ 240.00$ Variable costs (inputs)Titanium StaffsDM -- Units/product 1.02.0DM -- Price/u50.00$ 30.00$ DL -- Hours/product3.04.0DL -- Rate/hour25.00$ 30.00$ VMOH -- DLH/product3.04.0VMOH -- Rate/hour45.00$ 50.00$ Aluminum StaffsDM -- Units/product 2.03.0DM -- Price/u20.00$ 12.00$ DL -- Hours/product2.01.8DL -- Rate/hour25.00$ 30.00$ VMOH -- DLH/product2.01.8VMOH -- Rate/hour45.00$ 50.00$ FMOH500,000$ 475,000$
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