Crafts-Well Company specialises in making 3D miniature wooden ships models. The ship models are sold as...

 

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Crafts-Well Company specialises in making 3D miniature wooden ships models. The ship models are sold as premium corporate gifts and the company is famous for its refined craftsmanship. Customers ranges from small medium enterprises, multinational corporation, government agencies and community services in Malaysia. Some of the miniature models are exported to European countries. In year 2020, performance of company has been negatively affected by COVID 19 pandemic. However, despite the challenges, the company continue to innovate and expect business to have a speedy recovery in year 2022. For the most recent month, the company sold 6,000 miniature ships. Strict standards were in place for the miniature ships: 0.8m² of pine wood at RM20 per m². Each ship needs 3 hrs of craftsman time on materials preparation and assembly works. Craftsmen are paid at an. average rate of RM25 per hour. A review of the accounting records showed that 5,280 m² of pinewood were purchased and used, costing RM95,040. The craftsmen were paid a total of RM460,800 for working 19,200 hours. Required: (a) (b) (c) For the most recent month, perform a variance analysis for pinewood costs, craftsman labour costs. Include variances on total cost, prite/rate, usage/efficiency. (10 marks) Assume that the company receive substantially larger volume of sales returns for the most recent month. Based on your findings in (a) above, explain the most likely reasons that cause such irregular returns from the customers. (8 marks) Standard costs are said to be useful in performance evaluation. Illustrate how standard costs can be used to evaluate performance at Crafts-Well Company, and explain why the degree of controllability is important when utilizing standard costs to evaluate performance. Your discussion should be specific to Crafts-Well Company. (7 marks) Crafts-Well Company specialises in making 3D miniature wooden ships models. The ship models are sold as premium corporate gifts and the company is famous for its refined craftsmanship. Customers ranges from small medium enterprises, multinational corporation, government agencies and community services in Malaysia. Some of the miniature models are exported to European countries. In year 2020, performance of company has been negatively affected by COVID 19 pandemic. However, despite the challenges, the company continue to innovate and expect business to have a speedy recovery in year 2022. For the most recent month, the company sold 6,000 miniature ships. Strict standards were in place for the miniature ships: 0.8m² of pine wood at RM20 per m². Each ship needs 3 hrs of craftsman time on materials preparation and assembly works. Craftsmen are paid at an. average rate of RM25 per hour. A review of the accounting records showed that 5,280 m² of pinewood were purchased and used, costing RM95,040. The craftsmen were paid a total of RM460,800 for working 19,200 hours. Required: (a) (b) (c) For the most recent month, perform a variance analysis for pinewood costs, craftsman labour costs. Include variances on total cost, prite/rate, usage/efficiency. (10 marks) Assume that the company receive substantially larger volume of sales returns for the most recent month. Based on your findings in (a) above, explain the most likely reasons that cause such irregular returns from the customers. (8 marks) Standard costs are said to be useful in performance evaluation. Illustrate how standard costs can be used to evaluate performance at Crafts-Well Company, and explain why the degree of controllability is important when utilizing standard costs to evaluate performance. Your discussion should be specific to Crafts-Well Company. (7 marks)

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As per the strict standards of the company a Materia... View the full answer