Variance Project The Special Widget division manufactures a product called SW for Global Corporation. The plant...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Variance Project The Special Widget division manufactures a product called SW for Global Corporation. The plant is a completely autonomous subsidiary that sells SWs to other subsidiaries of Global Corporation, as well as outside companies. At the beginning of the ear the controller for Special Widget estimates sales and unit costs based on projections from past quarters' data. Projected sales for the quarter are 11,000 units and budgeted unit costs are as follows: Direct costs Raw materials (10 kilograms at $3.00/kilogram Direct Labor (.5 hours at $12/hour) Total direct cost per unit At the end of the quarter the budget and the actual results are compared. Usually the variances between the projected budget and the actual results are negligible. However, this quarter the results are drastically different from the budget. Projections estimated $30,000 in gross profit, but actual gross profit shows a loss of $30,690. general manager, who leads the profit center, received a variance report from production, but that didn't explain the entire difference. Having no confidence in his controller, the general manager brought in the internal audit team from Global Corporation. As the internal audit team, the first report required should use variances to explain the entire difference in gross profit and interpret those variances to initiate further investigation or corrective action. Detailed information about production and sales is as follows: Production Volume (units) Sales Volume (units) Sales Price per unit Direct labor hours Direct labor cost Raw Materials purchased (lbs) Raw Materials purchased ($) Raw Materials used (lbs) Overhead expenses ($) The report should include: . . All relevant variances • Interpretations of those variances ● Recommended corrective action Unit Costs $30.00 $6.00 $36.00 Actual 11,000 units 10,000 units $45.00 5,610 hours $66,759 120,000 lbs $384,000 115,500 lbs $84,000 Budget 11,000 units 11,000 units $46.00 5,500 hours $66,000 110,000 lbs $330,000 110,000 lbs $80,000 Further questions to ask before taking corrective action and potential actions based on potential answers. Variance Project The Special Widget division manufactures a product called SW for Global Corporation. The plant is a completely autonomous subsidiary that sells SWs to other subsidiaries of Global Corporation, as well as outside companies. At the beginning of the ear the controller for Special Widget estimates sales and unit costs based on projections from past quarters' data. Projected sales for the quarter are 11,000 units and budgeted unit costs are as follows: Direct costs Raw materials (10 kilograms at $3.00/kilogram Direct Labor (.5 hours at $12/hour) Total direct cost per unit At the end of the quarter the budget and the actual results are compared. Usually the variances between the projected budget and the actual results are negligible. However, this quarter the results are drastically different from the budget. Projections estimated $30,000 in gross profit, but actual gross profit shows a loss of $30,690. general manager, who leads the profit center, received a variance report from production, but that didn't explain the entire difference. Having no confidence in his controller, the general manager brought in the internal audit team from Global Corporation. As the internal audit team, the first report required should use variances to explain the entire difference in gross profit and interpret those variances to initiate further investigation or corrective action. Detailed information about production and sales is as follows: Production Volume (units) Sales Volume (units) Sales Price per unit Direct labor hours Direct labor cost Raw Materials purchased (lbs) Raw Materials purchased ($) Raw Materials used (lbs) Overhead expenses ($) The report should include: . . All relevant variances • Interpretations of those variances ● Recommended corrective action Unit Costs $30.00 $6.00 $36.00 Actual 11,000 units 10,000 units $45.00 5,610 hours $66,759 120,000 lbs $384,000 115,500 lbs $84,000 Budget 11,000 units 11,000 units $46.00 5,500 hours $66,000 110,000 lbs $330,000 110,000 lbs $80,000 Further questions to ask before taking corrective action and potential actions based on potential answers.
Expert Answer:
Related Book For
College Accounting Chapters 1-30
ISBN: 978-0077862398
14th edition
Authors: John Price, M. David Haddock, Michael Farina
Posted Date:
Students also viewed these accounting questions
-
A company's unit costs based on 100,000 units are: Variable costs $75 Fixed costs 30. The normal unit sales price per unit is $165. A special order from a foreign company has been received for 5,000...
-
A company's unit costs based on 100,000 units are: Variable costs $75 Fixed costs 30 The normal unit sales price per unit is $165. A special order from a foreign company has been received for 5,000...
-
Cleveland Chemical Company manufactures a product called Kylon, which requires three raw materials. Production is in batches of 1,000 gallons of finished product. The firm uses standard costs as a...
-
(7b-4c-1)-2 (2b3c-2)5 Simplify.
-
Write a method that parses a binary number as a string into a decimal integer. The method header is as follows: public static int binary to Decimal(String binaryString) For example, binary string...
-
Ortiz SA purchased a piece of equipment that cost R$202,000 on January 1, 2019. The equipment has the following components. Compute the depreciation expense for this equipment at December 31, 2019....
-
Petitioner Salman was indicted for federal securities-fraud crimes for trading on inside information he received from a friend and relative-by-marriage, Michael Kara, who, in turn, had received the...
-
John Adams Companys record of transactions for the month of April was as follows. Instructions (a) Assuming that perpetual inventory records are kept in units only, compute the inventory at April 30...
-
Anika who lives in Vancouver, purchased a piece of equipment from Australia for A$45,400. He was charged 19% duty, 5% GST, and 7% PST to import it. Calculate the total cost of the equipment. Assume...
-
In Integrative Case 10.1, we projected financial statements for Walmart Stores for Years +1 through +5. The data in Chapter 12, Exhibits 12.17 through 12.19 include the actual amounts for 2015 and...
-
Harper, age 45, earns $350,000 annually from Atlas, which sponsors a SIMPLE, and the required non- elective contribution to all eligible employees. What is the maximum total contribution to Harper's...
-
Are there any financial projection one could make specifically for Huntley school district 158?
-
The purchase cost for a new project is $20 million. The shipping and installation costs are $2 million. With the MACRS depreciation policy, what is the remaining book value of the fixed assets at the...
-
Myrna borrowed P5,000 from Jun payable on January 31, 2022. On due date, Myrna went to Junto deliver her cash payment but Jun refused to accept it. Then the bag containing her P5,000 cash was stolen...
-
The OB Service of Kennedy Hospital reported a total of 312 deliveries occurred in April, 20xx. Of the 312 deliveries, 316 infants were born and 39 deliveries were performed via C-Section. What is the...
-
when a central bank buys bonds from a commercial bank. Who decides the interest rate of the bond
-
1. Differentiate between Software Process and Software Practices 2. Describe the importance of the principles that Guide Process 3. How Communication Principle is different from planning principles...
-
Information graphics, also called infographics, are wildly popular, especially in online environments. Why do you think infographics continue to receive so much attention? How could infographics be...
-
RHCC Manufacturing Company manufactures one product that has several model styles. All materials are added at the beginning of production. Manufacturing overhead is applied as a percentage of direct...
-
What are the possible causes of labor variances?
-
Liberty Company purchased four identical machines on January 4, 2016, paying $9,000 for each machine. The useful life of each machine is expected to be five years, with no salvage value expected. The...
-
You need to calculate the anticipated database capacity for constructing a database with four tables, is shown below: Table 1 will be initially loaded with 200,000 records, Table 2 with 100,000...
-
You are studying the design documentation for an extremely large information system used by your organization. As expected, all entities on the logical data model are in third normal form. But in...
-
In comparing operational databases and data warehouses, which generally has fewer CRUD activities? Why?
Study smarter with the SolutionInn App