1 computing unit selling prices and unit costs of

This preview shows page 60 - 63 out of 72 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Applied Calculus for the Managerial, Life, and Social Sciences
The document you are viewing contains questions related to this textbook.
Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
1. Computing unit selling prices and unit costs of inputs: Actual selling price = $3,626,700 ÷ 462,000 = $7.85 Budgeting selling price = $3,360,000 ÷ 420,000 = $8.00 = × = ($7.85/unit – $8.00/unit) × 462,000 units = $69,300 U 2., 3., and 4. The actual and budgeted unit costs are: Actual Budgeted Direct materials Specialty polymer Connector pins Wi-Fi transreceiver $0.05 ($415,000 ÷ 8,300,000) 0.11 ($550,000 ÷ 5,000,000) 0.50 ($235,000 ÷ 470,000) $0.05 0.10 0.50 Direct manuf. labor Setup Fabrication 24.00 ($182,000 ÷ 455,000 × 60) 31.00 ($446,400 ÷ 864,000 × 60) 24.00 30.00 The actual output achieved is 462,000 Mini SDs. The direct cost price and efficiency variances are: Actual Costs Incurred (Actual Input Qty. × Actual Price) (1) Price Variance (2)=(1)–(3) Actual Input Qty. × Budgeted Price (3) Efficiency Variance (4)=(3)–(5) Flex. Budget (Budgeted Input Qty. Allowed for Actual Output × Budgeted Price) (5) Direct materials Specialty polymer $ 415,000 $ 0 $ 415,000 a $22,300 U $ 392,700 f
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Applied Calculus for the Managerial, Life, and Social Sciences
The document you are viewing contains questions related to this textbook.
Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
Connector pins 550,000 50,000 U 500,000 b 38,000 U 462,000 g Wi-Fi transreceiver 235 ,000 0 235 ,000 c 4 ,000 U 231 ,000 h $1 ,200,000 $50 ,000 U $1 ,150,000 $64 ,300 U $1 ,085,700 Direct manuf. labor costs Setup $182,000 $ 0 $182,000 d $ 2,800 F $184,800 i Fabrication 446 ,400 14 ,400 U 432 ,000 e 30 ,000 F 462 ,000 j $628 ,400 $ 14 ,400 U $614 ,000 $32 ,800 F $646 ,800 a $0.05 × 8,300,000 = $415,000 f $0.05 × 17 × 462,000 = $392,700 b $0.10 × 5,000,000 = $500,000 g $0.10 × 10 × 462,000 = $462,000 c $0.50 × 470,000 = $235,000 h $0.50 × 1 × 462,000 = $231,000 d $24.00/hr. × (455,000 min. ÷ 60 min./hr.) = $182,000 i $24.00 × (462,000 60) = $184,800 e $30.00/hr. × (864,000 min. ÷ 60 min./hr.) = $432,000 j $30.00 × (462,000 30) = $462,000 Comments on the variances include: Selling price variance. This may arise from a proactive decision to reduce price to ex- pand market share or from a reaction to a price reduction by a competitor. It could also arise from unplanned price discounting by salespeople. Material price variance. The $0.01 increase in the price per connector pin could arise from uncontrollable market factors or from poor contract negotiations by MicroDisk. Material efficiency variance. For all three material inputs, usage is greater than bud- geted. Possible reasons include lower quality inputs, use of lower quality workers (al- though this is not reflected in the labor price variances), and the setup and fabrication equipment not being maintained in a fully operational mode. The higher price paid for connector pins (and perhaps higher quality of pins) did not reduce the number of con- nector pins used to produce actual output. Labor efficiency variance. There is a small favorable efficiency variance for setup la- bor and a larger one for fabrication, which could both result from workers eliminating nonvalue-added steps in production. Labor price variance. There is an unfavorable price variance for fabrication as a result of the $1 higher wage per hour paid for that labor. The higher labor quality could also explain the significant efficiency variance for fabrication labor.
7-46 Variances in the service sector. Derek Wilson operates Clean Ride Enterprises, an auto detailing company with 20 employees. Jamal Jackson has recently been hired by Wilson as a controller. Clean Ride’s previous accountant had done very little in the area of variance anal- ysis, but Jackson believes that the company could benefit from a greater understanding of his business processes. Because of the labor-intensive nature of the business, he decides to focus on calculating labor variances.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture