d. During June 2019, Maju Berhad experimented with fewer senior technicians and more of assistant technicians in order to save costs of production. Advise Maju Berhad on whether to continue with the new labour mix policy. Calculate the variable overhead expenditure and efficiency variance for month of June 2019.
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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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- You are required show ALL supporting workings where necessary and state any assumption(s) made. Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00Required:g) Greek’s management team is concerned about the selling expenses associated with the product and wants to reduce the variable selling expense per unit by 30%, which will see a simultaneous reduction in…You are required show ALL supportingworkings where necessary and state any assumption(s) made. _C-V-P AnalysisGreek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00Required: a. Using the equation method calculate the normal capacity of the business b.Assuming sales equal to the normal capacity calculated in (a) above, prepare a contribution margin income…You are required to show ALL supporting workings where necessary and state any assumption(s) made.Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00Required:d) Assuming sales equal to the normal capacity calculated in a) above, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable…
- Sohan Ltd. manufactures three components A, B, and C, the cost of which is asfollows: You are to present a report to the management of the company showing whether it should continue to manufacture these components or whether it should buy them from a supplier, who has quoted the following price: A Rs.30; B Rs.15; C Rs.25.Assume that 4,500 units of the halogen light have been produced and sold during the current year. Analysis of the domestic market indicates that 3,600 additional units of the halogen light are expected to be sold during the remainder of the year at the normal product price determined under the total cost concept. Twilight Lumina Company received an offer from Contech Inc. for 1,400 units of the halogen light at $202.50 each. Contech Inc. will market the units in Southeast Asia under its own brand name, and no selling and administrative expenses associated with the sale will be incurred by Twilight Lumina Company. The additional business is not expected to affect the domestic sales of the halogen light, and the additional units could be produced using existing capacity. a. Prepare a differential analysis report of the proposed sale to Contech Inc. $Revenue from sale of additional units Variable costs of additional units Differential income (loss) from accepting offerThe Nature and Wildlife Corporation has manufacturing facilities in country A and an assembly plant in country B. In June 2020, the company will ship 1,000 units with a production cost of $65 per unit to its plant in country B. Its operating expenses in country A are $15,000 for the month. The income tax rate in country A is 20% and in country B it is 40%. The company plans to have a transfer price of $100 per unit. The final product can be sold in country B for $140. Country B’s operating expenses are $10,000 during the month. How much will the combined profits of the two operations be in April 2021?
- Study the scenario and complete the question that follows:Jojo LtdJojo Ltd manufactures products Abbisha and Babbisha from raw material Zaro. The raw material isimported at a cost of R15 per kilogram from Garwe Limited, a foreign company. As a result of a fire thatdestroyed the warehouse of the supplier, the 2020 import of Zaro will be limited to 80% of the quantityimported in 2019.Following the restrictions on raw material imports, labour hours will, according to estimate, reduce by10 000 hours in comparison to those worked in 2019. The management of the company, however, hasdecided to maintain a minimum wage rate of R6 per hour.The following is an extract from the budget for the 2020 financial year based on 95% of the availablemachine hours. ABISHA BABISHA Sales volume in units 12000 16000 Sales volume in rands R348000 R512000 R R Standards per unit Raw material-Zaro 12.00 7.50 Labour 4.50 3.00 Overheads 3.00 5.00 The budgeted fixed manufacturing…The Nature and Wildlife Corporation has manufacturing facilities in country A and an assembly plant in country B. In June 2020, the company will ship 1,000 units with a production cost of $65 per unit to its plant in country B. Its operating expenses in country A are $15,000 for the month. The income tax rate in country A is 20% and in country B it is 40%. The company plans to have a transfer price of $100 per unit. The final product can be sold in country B for $140. Country B’s operating expenses are $10,000 during the month. Suppose the income tax rate in country A is 40% while in country B it is 20%. What will the combined profit be if all of the other numbers are the same as they were in the original assignment description? What would be the result in question 3 if the company decreased its transfer price to $90?The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express the companys maintenance costs as an equation where x represents the gallons of paint produced. Then estimate the fixed and variable costs. Predict the maintenance costs i190,000 gallons of paint are produced. Predict the maintenance costs if 81,000 gallons of paint are produced. Using Excel, create a scatter graph of the cost data and explain the relationship between gallons of paint produced and equipment maintenance expenses.
- KPR manufactures is planning to introduce energy flavored milk from 1 July 2019. In this respect, following projections have been made: C-PLUS Planned production (No. of packets) 42,000 Sales (No. of packets) 42,000 Production cost per packet: (Rupees) Direct material 100 Direct labor 15 Variable overheads 23 Fixed overheads 1,500,000 Selling and distribution cost per packet: Variable overheads 12 Fixed overheads 500,000 current profit 100,000 Required Compute break-even sales and margin of safety in units (budgeted units 41,000)Calculate the number of units to be sold to maintain the current profit if the sales price remains at Rs. 100 and the variable overhead is Rs 33.Jojo LtdJojo Ltd manufactures products, Abbisha and Babbisha, from raw material, Zaro. The raw material is imported at a cost of R15 per kilogram from Garwe Limited, a foreign company. As a result of a fire that destroyed the warehouse of the supplier, the 2020 import of Zaro will be limited to 80% of the quantity imported in 2019.Following the restrictions on raw material imports, labour hours will, according to estimate, reduce by 10 000 hours in comparison with those worked in 2019. The management of the company, however, has decided to maintain a minimum wage rate of R6 per hour.The following is an extract from the budget for the 2020 financial year based on 95% of the available machine hours.Abbisha BabbishaSales volume in units 12 000 16 000Sales volume in rands R348 000 R512 000R RStandards per unitRaw material - Zaro 12.00 7.50Labour 4.50 3.00Overheads 3.00 5.00The budgeted, fixed manufacturing overheads for the year amount to R63 800. Overheads are allocated to production at a…Blossom Company sells 320 units of its products for $20 each to Wildhorse inc. for cash. Blossom allows Wildhorse to return any unused product within 30 days and receive a full refund. The cost of each product is $11. To determine the transaction price, Blossom decides that the approach that is most predictive of the amount of consideration to which it will be entitled is the probability weighted amount. Using the probability-weighted amount. Blossom estimates that (1) 7 products will be returned, and (2) the returned products are expected to be resold at a profit. Prepare the journal entries for Blossom at the time of the sale to Wildhorse including any expected returns. The company follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter "0" for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cash (To record…