Elianna Corporation started the year expecting to produce and sell 130,000 units of its super-insulating coffee...

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Elianna Corporation started the year expecting to produce and sell 130,000 units of its super-insulating coffee mugs, but it ended the year having produced and sold even more than that -142,000 units. Needless to say, owners Eli and his sister Anna were thrilled to have exceeded sales goals for the year. By the end of the third quarter, results looked promising. They were even more excited to see the final year-end financial statements and share the great news with their crew. The actual results, along with the original master budget for the year, are as follows. Actual Income Flexible Budget Master Budget $2,591,500 Sales Variable costs: DM DL Variable-MOH Variable SG&A Contribution margin. Fixed costs: 427,750 618,000 Fixed-MOH 265,500 120,700 1,159,550 $2,405,000 390,000 546,000 208,000 110,500 1,150,500 480,000 Fixed SG&A 431,500 Operating income $ 248,050 In addition to seeing total actual results, the owners would like a more thorough analysis of many of these accounts. Required a. Recreate Elianna's standard cost card for DM, DL, variable-MOH, and fixed-MOH. Specify quantity and price standards, along with a total standard cost per unit for each. Additional information pertaining to each resource follows. • Each mug was expected to use 2 pounds of DM. • Each mug was expected to use 0.30 hours of DL. • Variable- and fixed-MOH costs are applied based on pounds of DM. b. Insert Elianna's flexible budget into the above framework. Calculate and label all flexible budget variances and sales activity variances, indicating an amount and sign for each. c. Conduct a detailed variance analysis for all product costs (price, efficiency, and volume variances), taking the following details into consideration. The company purchased and used 295,000 pounds of DM. • 41,200 DL hours were used. 468,000 406,000 $ 276,500 d. If Eli and Anna were comparing the company's actual revenues to its master budget revenues throughout the year, what conclusions were they likely drawing? Could their conclusions about revenues have driven some decisions related to SG&A spending? Explain whether and why there could be a connection between the two. Elianna Corporation started the year expecting to produce and sell 130,000 units of its super-insulating coffee mugs, but it ended the year having produced and sold even more than that -142,000 units. Needless to say, owners Eli and his sister Anna were thrilled to have exceeded sales goals for the year. By the end of the third quarter, results looked promising. They were even more excited to see the final year-end financial statements and share the great news with their crew. The actual results, along with the original master budget for the year, are as follows. Actual Income Flexible Budget Master Budget $2,591,500 Sales Variable costs: DM DL Variable-MOH Variable SG&A Contribution margin. Fixed costs: 427,750 618,000 Fixed-MOH 265,500 120,700 1,159,550 $2,405,000 390,000 546,000 208,000 110,500 1,150,500 480,000 Fixed SG&A 431,500 Operating income $ 248,050 In addition to seeing total actual results, the owners would like a more thorough analysis of many of these accounts. Required a. Recreate Elianna's standard cost card for DM, DL, variable-MOH, and fixed-MOH. Specify quantity and price standards, along with a total standard cost per unit for each. Additional information pertaining to each resource follows. • Each mug was expected to use 2 pounds of DM. • Each mug was expected to use 0.30 hours of DL. • Variable- and fixed-MOH costs are applied based on pounds of DM. b. Insert Elianna's flexible budget into the above framework. Calculate and label all flexible budget variances and sales activity variances, indicating an amount and sign for each. c. Conduct a detailed variance analysis for all product costs (price, efficiency, and volume variances), taking the following details into consideration. The company purchased and used 295,000 pounds of DM. • 41,200 DL hours were used. 468,000 406,000 $ 276,500 d. If Eli and Anna were comparing the company's actual revenues to its master budget revenues throughout the year, what conclusions were they likely drawing? Could their conclusions about revenues have driven some decisions related to SG&A spending? Explain whether and why there could be a connection between the two.

Answer rating: 100% (QA)

a Ellanna Corporations Standard Cost Card Resource Quantity Standard Price Standard Total Standard Cost per Unit Direct Materials DM 2 pounds 105 per pound 210 Direct Labor DL 030 hours 2050 per hour ... View the full answer