CE 18-1

1. Mark up on Cost of Goods Sold = (Selling and Administrative Expense + Operating Income)
Cost of Goods Sold
= 19,400 + 40,520
214,000
= 59,920 / 214,000
= 28%

2. Price for New Product = Total Cost + (Mark up on Cost of Goods Sold * Total Cost)
= 300 + 28% * 300
= 300 + 84
= 384

3. Mark up on Direct Materials = (Direct Labor + Overhead + Selling and Administrative Expense + Ope
Direct Material
= 45,000 + 45,000 + 19,400 + 40,520
124,000
= 149,920
124,000
= 121%

Bid Price = (Direct Materials #2 + Mark up on Direct Materials * Direct Materials

= 230 + 121% * 230
= 230 + 278
= 508
perating Income)

Sold * Total Cost)

nd Administrative Expense + Operating Income)

irect Material

irect Materials * Direct Materials #2)

 CS 18-2
COSTS OF DIFFERENT CUSTOMER CLASSES

Average Manufacturing Cost : $ 48 Per Case

A case contain : 24 cans of nuts
Sold : $ 150,000 Case
Price Per
Customer Case
Cases Sold
Supermarkets $ 55 80,000
Small Grocers $ 90 40,000
Convenience Stores $ 88 30,000

Supermarkets
Labeling Cost : $ 0.03 Per Case
EDI : $ 50,000
Distribution Cost : $ 50,000 Per year

Small Grocers
Special Handling : $ 20 Per Case
Sales Comminsion ( 10% Of Sales ) : $ 9 Per Case
Bad Debt Expense ( 8% Of Sales ) : $ 7 Per Case

Convience Stores
Special Handling : $ 30 Per Case
Advertising Cost : $ 15,000 Per year
Delivery Cost : $ 30,000 Per year
CE18-2
1. Total Cost Per Case 2.
Supermarket Price per Case
Manufacturing Cost per Case 48 Less:
Special Label Cost (0,03*24) 0.72 Profit per Case
EDI (50000/80000) 0.625 Profit Percent per Ca
Shipping (50000/80000) 0.625
Total Cost per Case 49.97
T

Small Grocers
Manufacturing Cost per Case 48 3.
Special Label Cost (Given Cost) 20 The average price pe
Sales Commission (90*,1) 9 Small Grocers and C
Bad Debt Expense (90*,08) 7.2 Nuts form Garrity w
Total Cost per Case 84.2

Convenience Store
Manufacturing Cost per Case 48
Special Handling per Case (Given Cost) 30
Selling Expense (30000+15000)/30000 1.5
Total Cost per Case 79.5
 Supermarket Small Grocers
Price per Case 55 90
Cost per Case -49.97 -84.2
Profit per Case 5.03 5.8
Profit Percent per Case 9.15% 6.44%

The profit percentage range from 6,44% to 9,66%. It appears to be cost justification for the price differentials am

The average price per case is 77,67. If this price were to be charged to all three customers, the profit percentage for the Supermark
Small Grocers and Convenience Store would decrease. While Garrity would earn the same overall profit percentage, this assumes t
Nuts form Garrity with the new higher price. Though this assumption might be wrong. The Supermarket may refuse to buy any pro
sold overall and a lower profit from the remaining customers.
 Convenience Store Average
88 77.67
-79.5 -71.22
8.5 6.44
9.66% 8.42%

he price differentials among the three customer classes.

tage for the Supermarket would ncrease and the profit percentage for the
rcentage, this assumes that the Supermarket would continue to purchase
y refuse to buy any product from Garrity, leaving Garrity with fewer units
ng customers.
ABSORPTION COSTING AND VARIABLE COSTING, VALUE OF ENDING INVENTORY, OPERATING INCOM

Manufactured in october 30,000 Unit

Fixed factory overhead $ 300,000 Per month
Sold during october 28,000 Unit
Price unit sold $ 35 Unit
Fixed marketing & adm expense $ 130,500

Diret materials $ 6.00

Direct abor $ 3.00
Variable overhead $ 2.00
Fixed overhead $ 10.00
Variable marketing cost 2.50

CE18-3
1. Absorption Costing = Calculating the total cost WITH both Variable and Fixed Overhead
Direct Materials 6
Direct Labor 3
Variable Overhead 2
Fixed Overhead 10
Total Cost 21

2. Units in Ending Inventory = Beginning Inventory + Unit Produce - Unit Sold

= - + 30,000 - 28,000
= 2,000

3. Baxter Products, inc

Absorption Costing Income Statement
For the Month of October

Sales (35*28000) 980,000

Less : Cost of Goods Sold (21*28000) (588,000)
Gross Profit 392,000

Less : Variable Marketing Cost (2,5*28000) (70,000)

Fixed Marketing and Administrative Expense (130,500)
Operating Income 191,500

4. Units in Ending Inventory = Beginning Inventory + Unit Produce - Unit Sold

= 2,000 + 30,000 - 31,000
= 1,000

Unit Production Cost

Direct Materials 6
Direct Labor 3
 Variable Overhead 2
Fixed Overhead 10
Total Cost 21

Cost in Ending Inventory = 1,000 * 21

= 21,000

The New Operating Income is

Baxter Products, inc

Absorption Costing Income Statement
For the Month of October

Sales (35*31000) 1,085,000

Less : Cost of Goods Sold (21*31000) (651,000)
Gross Profit 434,000

Less : Variable Marketing Cost (2,5*31000) (77,500)

Fixed Marketing and Administrative Expense (130,500)
Operating Income 226,000
INVENTORY, OPERATING INCOME

CE18-4
Variable Costing = Calculating the total cost WITH ONLY Variable Overhead
Direct Materials 6
Direct Labor 3
Variable Overhead 2
Total Cost 11

Units in Ending Inventory = Beginning Inventory + Unit Produce - Unit Sold

= 0+ 30,000 - 28,000
= 2,000

Baxter Products, inc

Variable Costing Income Statement
For the Month of October
Percent of Sales
100% Sales (35*28000)
-60% Less : Cost of Goods Sold (11*28000)
40% Less : Variable Marketing Cost (2,5*28000)
Contribution Margin
-7.14%
-13.32% Less : Fixed Factory Overhead
19.54% Fixed Marketing and Administrative Expense
Operating Income

Cost of Ending Inventory = 11 * 1,000

= 11,000
The New Operating Income is

Baxter Products, inc

Variable Costing Income Statement
 For the Month of October

Sales (35*31000)
Less : Cost of Goods Sold (11*31000)
Variable Marketing Cost
Contribution Margin

Less : Fixed Factory Overhead

Fixed Marketing and Administrative Expense
Operating Income

Percent of Sales
100%
-60%
40%

-7.14%
-12.03%
20.83%
oduce - Unit Sold

nc
Statement
tober
Percent of Sales
980,000 100%
(308,000) -31%
(70,000) -7.14%
602,000 61%

(300,000) -31%
(130,500) -13.32%
171,500 71.79%

nc
Statement
tober
Percent of Sales
1,085,000 100%
(341,000) -31%
(70,000) -6.45%
674,000 62%

(300,000) -27.65%
(130,500) -12.03%
243,500 22.44%
DIK :
Reiser Company is a pet food wholesale fir. In Deember, Reiser Company expencts to sell 20.000 bags of pet food at an avera
of $2.20 per bag. Actual Results are 18.500 bags sold at an average price of $2.25 per bag

CE18-5
1. Calculate the sales price variance or December
Sales price variance = (Actual price - expected price) x qty sold
(2.25-2.20) * 18.500
925 F
2. Calculate te price volume variance or December
Price volume variance = (actual volume - expected volume) x expected price
(18.500 - 20.000) x 2.20
-3300 U
3. Calculate the overall sales price variance for december. Explain why it is favorable or unfavorable
overall sales volume = sales price variance + price volume variance
925+(-3.300)
-2375 U
4. What if december sales were actually 22.000 bags ? How would that affect the sales price variance ?
the price volume variance ? The overall sales variance ?
Sales price variance = (2.25-2.20) x 22.000
1100 F
Price Volume Variance = (22.000-20.000) x 2.20
4400 F
Overall sales volume = 1.100 + 4.400
5500 F
0 bags of pet food at an average price
DIK :
Rombley Inc. produces and sells two types of power lawn mowers (basic and self propelled) budgeted data for the two mode
budgedted
Self propelled
Basic Mowers
mowers
Sales
($250 x 15.000) $ 3,750,000
($300 x 45.000) $ 13,500,000
variable expenses $ 1,500,000 $ 9,000,000
Contribution margin $ 2,250,000 $ 4,500,000

Actual
Self propelled
Basic Mowers
mowers
Sales
($238 x 14.800) $ 3,522,400
($310 x 44.000) $ 13,640,000
variable expenses $ 1,628,000 $ 7,920,000
Contribution margin $ 1,894,400 $ 5,720,000

CE18-6
1. Calculate the contribution margin variance
contribution margin variance = Actual contribution margin - expected contribution margin
= 7.614.000 - 6.750.000
= 864,000 (F)

2. what if actual unit sold of the self-propelled mover increased ? How would that affect the contribution margin variance ?
what if actual unit sold of the self-propeled mover decresed ? How would that affect the contribution margin variance ?

= If actual unit sold in self propelled mowel decreased then it would decrease the contribution margin and might be unfavora
if it would increase contribution margin and be much more favorable
eted data for the two models are shown :

Total

$ 17,250,000
$ 10,500,000
$ 6,750,000

Total

$ 17,162,400
$ 9,548,000
$ 7,614,400

ntribution margin

ibution margin variance ?

bution margin variance ?

argin and might be unfavorable

DIK : Refer to CE18-6

budgedted
Basic Mowers Self propelled mowers
Sales
($250 x 15.000) $ 3,750,000
($300 x 45.000) $ 13,500,000
variable expenses $ 1,500,000 $ 9,000,000
Contribution margin $ 2,250,000 $ 4,500,000

Actual
Basic Mowers Self propelled mowers
Sales
($238 x 14.800) $ 3,522,400
($310 x 44.000) $ 13,640,000
variable expenses $ 1,628,000 $ 7,920,000
Contribution margin $ 1,894,400 $ 5,720,000

CE18-7
1. calculate the budgeted average unit contribution margin
budgeted total contribution margin 6.750.000
=
budgeted total unit 15.000 + 45.000

6,750,000
= =
60,000

2. Contribution margin volume variance

= (Actual qty sold - budgeted qty sold) x budgeted average unit contribution margin
= ((14.800+44.000) - (15.000+45.000) x 112.5
= (135,000) (U)

3. what if actual unit sold of the self propelled mower decreased ? How would that affects the contribution margin volme var
what if actual unit sold of the self propelled mover increased ? How would that affect the contribution margin volume vari

= Jika actual unit sold pada self propelled mower semakin menurun, maka akan menyebabkan contribution margin volume v
dan begitu juga sebaliknya jika actual semakin tinggi maka akan semakin menurun ada kemungkinan jadi favorable
 Total

$ 17,250,000
$ 10,500,000
$ 6,750,000

Total

$ 17,162,400
$ 9,548,000
$ 7,614,400

112.5

ribution margin volme variance ?

bution margin volume variance ?

tribution margin volume variance semakin unfavorable

nan jadi favorable
DIK : Refer to CE18-6

budgedted
Basic Mowers Self propelled mowers
Sales
($250 x 15.000) $ 3,750,000
($300 x 45.000) $ 13,500,000
variable expenses $ 1,500,000 $ 9,000,000
Contribution margin $ 2,250,000 $ 4,500,000

Actual
Basic Mowers Self propelled mowers
Sales
($238 x 14.800) $ 3,522,400
($310 x 44.000) $ 13,640,000
variable expenses $ 1,628,000 $ 7,920,000
Contribution margin $ 1,894,400 $ 5,720,000

CE18-8
1. Calculate the sales mix variance
Sales mix variance = (Basic mower actual unit - basic mower budgeted unit) x (basic mower budgeted contribution margin -
Budgeted average unit margin) + (self propelled mower actual unit - self propelled mower budgeted uni
(self propelled budgeted contribution margin - budgeted average unit contribution margin)
= (14.800 - 15.000) x (150-112.5) + (44.000 - 45.000) x (150-112.5)
= -200 x 37.5 + -1000 x -12.5
= -7500 + 12500
= 5000 (F)
Basic Mower Budgeted Contribution Margin : 2.250.000 / 15.000
: 150
Self Propelled budgeted contibution margin : 4.500.000 / 45.000
: 100

2. What if actual units sold of the basic mower increased? How would that affect the sales mix variance ?
What if actual units sold of the self-propelled mower increased ? How would that afect the sales mix variance ?
= Jika angka actual unit sold naik maka akan menambah nilai favorable sedangkan jika angka self propelled actual naik me
angka budgeted maka akan mengurangi angka/nilai favorable (jika angka yang lain semua tetap)
 Total

$ 17,250,000
$ 10,500,000
$ 6,750,000

Total

$ 17,162,400
$ 9,548,000
$ 7,614,400

eted contribution margin -

pelled mower budgeted unit) x
bution margin)

sales mix variance ?

self propelled actual naik melebihi
 CE18-9
1. Actual Market Share Percentage = Total Actual Sales
Total Unit Sales
= 58,800
1,190,000
= 4.94%

Budgeted Market Share Percentage = Total Budgeted Sales

Total Budgeted Unit Sales
= 60,000
1,200,000
= 5.00%

2. Market Share Variance = [(Actual Market Share Percentage - Budgeted Market Share Percentage)
= [(1.190.000 - 1.200.0000)*5%]*112.5
= (500.00) x 112.5
= (56,250.00) U

3. Jika Penjualan sebenarnya adalah 61000 Unit maka actual market share percentage akan meningkat menjadi 5,13%. H
dan tidak mempengaruhi Market Size Variance
 CE18-9
Market Share Variance = [(0.0494 - 0.05 )*1.190.000]*112.5
= -714 x 112.5
= (80,325.00) U

dgeted Market Share Percentage) * Actual Industry Sales in Units] * Budgeted Average Unit Contribution Margin

akan meningkat menjadi 5,13%. Hasil tersebut akan menajadi Favorable

ket Size Variance
 PROBLEM 18-30
ETHICAL ISSUES, ABSORPTION COSTING, PERFORMANCE MEASUREMENT

1 Discuss the behavior of Steve Preston, the divisional manager. Was the decision to produce for inventory an ethical one ?
2 What should Bill Fremont do? Should he comply with the directive to emphasize the increase in profits ? If not , what op
3 Chapter 1 listed ethical standards for management accountants. Identify any stadards that apply in this situasion.

1 tidak layak karena menurut si Bill Fremont, Market price akan baru meningkat di dua tahun berikutnya, jika produksinya
maka akan terjadinya barang sisa yang tidak terjual, dan biayanya akan meningkat.
2 Tidak, lebih baik untuk memproduksi sesuai dengan demand pasar dan perhitungan forecast berdasarkan pengalaman seb
3 Kompetensi, si Bill Fremont harus memberikan informasi yang akurat, singkat, padat, jelas dan tepat waktu berdasarkan p
mengenai market demand
Confidentiality, si Bill Fremont harus yakin bahwa pengalaman sebelumnya jika memang bersangkutan dengan kasus yan
maka harus disampaikan jika tidak, tidak perlu diungkapkan (dirahasiakan)
Credibility, si Bill Fremont harus mengkomunikaskan pengalaman lalunya tetnang peningkatan market demand secara ad
 or inventory an ethical one ?
e in profits ? If not , what option does he have ?
ply in this situasion.

berikutnya, jika produksinya sudah ditingkatkan

berdasarkan pengalaman sebelumnya

an tepat waktu berdasarkan pengalaman lalunya

rsangkutan dengan kasus yang dihadapi sekarang

an market demand secara adil dan obyektif