GROUP

CMA Project:
Waltham Motors
Ashwin K Raj, 257
Prathyush Barua, 285
Smrithi P S, 298
Tejveer Singh, 301
Vineet Bajaj, 307
 About

Waltham manufactured electric motors

of a single design. They were acquired
by Macro Corporation in late 2003 and
changes were made to the company’s
operating procedures and systems. Due
to the changes and they lost a customer
contract creating variances between the
actual and budgeted figures for May
Performance report – May,
2004
 INVENTORIES
No beginning and ending
inventories in WIP or
Finished Goods
01
DIRECT LABOUR
Per Unit = 16
2 hr/unit as labour time 02
Direct Material
REQUIRE 03 Per Unit = 6

D INFO
Variance
04 Actual material prices =
5% less than expected
Actual labour cost =
8.2/hour due to medical
benefits
 Q1. Using budget data, how
many motors would have to be
sold for Waltham Motors
Division to
break – even?
Break even sales = Number of units to be sold so that Profit
equals Loss
Budgeted Fixed Cost/Contribution Per Unit

Contribution per unit = Budgeted CM/Budgeted Units Sold

= $3,51,200/18000

= $19.51/unit

Break even units = $2,60,000/19.51

=13,326 units
 Q2(a). Using budget data, what was the
total expected cost per unit if all
manufacturing & shipping overhead (both
variable & fixed) was allocated to planned
production?
 Total expected cost
Total variable cost =
= $7,72,800
$5,12,800
Total fixed cost = Total budgeted
$2,60,000 units = 18000
units

Total
expected cost
per unit =
$7,72,800/18
000 = $42.93
Q2(b). What was the actual per unit cost of
production and shipping?
 Actual
production
cost per Unit
Total actual shipping cost/Total
Total actual production cost/Total Actual units
actual units Total actual shipping cost =
Total actual production cost = $28000
(4,04,000+1,49,200) =
$5,53,200 Actual units = 14000
Per unit Actual shipping cost = $2
Actual units = 14000 Actual shipping
cost per Unit
Per unit Actual production cost =
5,53,200/14000 = $39.51
Q3. Comment on the performance report and the
plant accountant’s analysis of results.How,if at
all,would you suggest the performance report be
changed before sending it on to the division
manager and Marco corporation headquarters??
 Comments on performance
report

The actual labour costs were

$8.79/hour as opposed to
• Comparison is being done
the predicted $8.20/hour
between two different
sets of units. This is an
Material Cost Labour cost unreliable practice

Actual material cost per • No information is

unit = $6.1 available on opening and
As opposed to a 5% closing inventories
decrease that was
predicted by the
Accountant’s analysis
 Recommendations

Replace Direct Labor cost

and
direct material costs with
actual
Numbers. This allows the
company to move from
negative
operating loss to a Prepare flexi budget
positive one of for more activity
$13156 levels
 Q4. Prepare your own analysis of the
Waltham Division’s Operations in May.
Explain in as much detail as possible why
income differed from what you would have
expected?
ANALYSIS

WORKING
EXCEL
 ANALYSIS

Expected income was Actual selling price Actual direct material Actual direct labor
recorded against was $49, whereas cost per unit was cost per unit was
output of 18000 units budgeted selling price $6.1, whereas its $17.57 whereas its
whereas actual was $48 budgeted value was budgeted value was
income was against $6 $16
14000 units
Thank You