COST EXERCISE 10 Variance Analysis The standard price for steel included in a production of a garden chair is 14 per kilo.

During May, the quantity of steel used during the month was 5,500 kilos at a price of 15 per kilo, and the quantity allowed for was 5,600 kilos. Required:

To calculate materials price and materials efficiency variance.

COST EXERCISE 11 Variance Analysis & Under or Over Absorption Ace Engineerings Fixed Overhead Absorption Rate is based on a budgeted (expected) output of 2,000 units and a budgeted total fixed overhead cost of 26,000. For May, the actual results for Product 242 were: Budgeted Costs Materials per unit 20 Kilos at 10 per Kilo = 200 Labour per unit 4 Hours at 8 per hour = 32 Overheads Per unit produced = 13 Total budgeted cost per unit =245 Units produced Materials consumed Labour Overheads Required to calculate the following variances: Material price and efficiency. Labour rate and efficiency. Overhead spend variance and under or over absorption. Prepare a statement reconciling standard and actual profits; and provide two possible reasons for each of the material and labour variances. Actual Activity May 2009 2,100 44,100 kilos @ 9.50 418,950 7,350 @ 8.50 62,475 25,725

COST EXERCISE 12 Variance Analysis & Under or Over Absorption Cliven Corporations Fixed Overhead Absorption Rate is based on a budgeted (expected) output of 14,800 units and a budgeted total fixed overhead cost of 14,800. For November, the actual results for Product A21 were as follows: Materials per unit Labour per unit Overheads Total budgeted costs per unit Units produced Materials Consumed Labour Overheads Required to calculate the following variances: Material price and efficiency. Labour rate and efficiency. Overhead spend variance and under or over absorption. Budgeted Costs 2 sheets at 1.5 per sheet = 3 1 Hour at 22 per hour = 22 Per unit produced = 1 = 26 Actual Activity May 2009 14,100 44,000 sheets 131,000 15,000 hours 325,000 15,725

Prepare a statement reconciling standard and actual profits; and provide two possible reasons for each of the material and labour variances.

COST EXERCISE 13 Overhead variances & under or over absorption Cricket Bat Company uses a standard-costing system. The company prepared its static budget for the year based on 420,000 units. Total budgeted fixed overheads were 1,500,000. Actual results for the year were: Output 415,500 units. Fixed Overheads 1,504,110

Required: What is the budgeted absorption rate per unit of production What is the Under or Over absorbed overheads What is the total loss variance against budget

COST EXERCISE 14 Overhead variances & under or over absorption Pepper Enterprises uses a standard-costing system. The company prepared its static budget for the year based on 65,000 units. Total budgeted fixed overheads were 650,000. Actual results for the year were: Output 64,500 units. Fixed Overheads 625,000

Required: What is the budgeted absorption rate per unit of production What is the Under or Over absorbed overheads What is the total loss variance against budget

COST EXERCISE 15 CVP and break even Super Sales Company is the exclusive distributor for an expensive pen set. The product sells for 60 per unit and has a Contribution Margin ratio of 40%. The company's fixed expenses are 360,000 per year. Required: 1. What are the variable expenses per unit? 2. What is the break-even point in units? 3. What sales level in units will be required to earn an annual profit of 90,000? 4. Assume that through negotiation with the manufacturer the Super Sales Company is able to reduce its variable expenses by 3 per unit. What is the Company's new break-even point in? COST EXERCISE 16 CVP and break even The Army Watch Company distributes a wrist watch which sells for 14 and has a Contribution Margin ratio of 30%. The company's fixed expenses are 60,000 per year. Required: 1. What are the variable expenses per unit?

2. What is the break-even point in units? 3. What sales level in units will be required to earn an annual profit of 20,000? 4. Assume that through negotiation with the retailers the company is able to increase its selling price by 1 per unit. What is the Company's new break-even point in?