Question 1

(Appendix 10C)Yukon Company expressed the total expenses (Y)component of its master budget for March with the cost formula Y = $100,000 + $40 * X,where X represents the expected number of units of its only product to be manufactured and sold.The budgeted average selling price per unit was $65 for budgeted sales volume 5,000 units based on an estimated industry volume of 50,000 units.Reported actual results for February were as follows:  
*Actual industry sales volume was 60,000 units.
Required:
a)Calculate the flexible budget variance and analyze it into sales price variance and cost/expense variance(s).
b)Calculate the sales volume variance and analyze it into market-size (industry volume)variance and market-share variance.
c)On the basis of your analysis in parts (a)and (b),would you recommend a bonus be paid to the sales manager? Why or why not?

Accepted Answer

The answer of (Appendix 10C)Yukon Company expressed the total expenses...

Question 2

(Appendix 10C)Iraj Company retails two grades of Persian carpets: Grade X and Grade Y.The carpets are sold by rolls.The following is a summary of the company's activities for last year:  
Required:
a)Assume the two grades of carpet are close substitutes.Calculate the sales volume variance for each grade of carpet and analyze each into a sales mix variance and a sales quantity variance.
b)Analyze the sum of the sales quantity variance into its two components: market volume variance and market share variance.
c)Comment on the appropriateness of the assumption of close substitution between the two grades of carpet.Comment also on the effect,if any,on the analysis in part a)above if this assumption is considered inappropriate.

Accepted Answer

The answer of (Appendix 10C)Iraj Company retails two grades of...

Question 3

(Appendix 10A)Pictou Company uses two raw materials,X and Y,in the manufacture of its only product: Gizmo.Both materials are very close substitutes.The standard proportions for the manufacture of a unit of Gizmo are 6 units of X and 4 units of Y.The unit standard prices of X and Y are $16 and $20,respectively.During the month of August,the company used 3,000 units of X and 1,800 units of Y to produce 460 units of Gizmo.
Required:
a)Calculate the following variances for raw materials X and Y:
(i)Quantity variances.
(ii)Mix variances.
(iii)Yield variances
b)Suppose you are made aware that the assistant production manager recommended the departure from the standard mix.Should the assistant manager be commended? Explain

Accepted Answer

The answer of (Appendix 10A)Pictou Company uses two raw materials,X...

Quiz 10: Standard Costs and Overhead Analysis