Question 3 (35%) Given the following information for ARC Inc.: Budget Actual Units produced 10,000 9,500 Materials (kg) 400 405 Direct Labour (Hours) 35,000 32,300 Material Costs $8,000 Direct Labour Costs $385,000 $365,750 Variable Overhead Costs $350,000 $340,000 Fixed Overhead Costs $160,000 $161,000 Other Information Overhead is Allocated based Normal costing and budgeted Direct Labour Hours During the year, 500 kg of materials were purchased for $9,000 Beginning Inventory: none Ending Inventory: 95kg Required: Calculate the following variances 1. Material Rate and Material Efficiency 2. Labour Price and Labour Efficiency 3. Variable Overhead Rate and Variable Overhead Efficiency 4. Fixed Overhead Rate and Fixed Overhead Production Volume 5. What can you interpret from the result to offer to ARC Inc.?Question #2 (35%) Power Motor Inc. (PMI) produces the same power generators in two plants, a newly renovated, automated plant in Pembroke, and an older, less automated plant in Morrisburg. The following data are available for the two plants: Selling price $150.00 $150.00 Variable manufacturing cost per unit $72.00 $88.00 Fixed manufacturing cost per unit $30.00 $15.00 Variable marketing and distribution cost/unit $14.00 $14.00 Fixed marketing and distribution cost/unit $19.00 $14.50 Total cost per unit $135.00 $131.50 Operating income per unit $ 15.00 $18.50 Production rate per day 400 units 320 units Normal annual capacity usage 240 days 240 days Maximum annual capacity 300 days 300 days All unit fixed costs are calculated based on a normal year of 240 working days. When the number of working days exceeds 240, variable manufacturing costs increase by $3.00 per unit in Pembroke and $8.00 per unit in Morrisburg. PMI is expected to produce and sell 192,000 generators during the coming year. Wanting to maximize the higher unit profit at Morrisburg, PMI's production manager decided to manufacture 96,000 units at each plant. This production plan results in Morrisburg operating at capacity (320 units per day 300 days) and Pembroke operating at its normal volume (400 units per day 240 days). Required: 1. Determine the breakeven point for the Pembroke and Morrisburg plants in units and in dollars 2. Calculate the operating income that would result from the division production manager's plan to produce 96,000 units at each plant 3. Determine how the production of the 192,000 units should be allocated between Pembroke and Morrisburg to maximize operating income for PMI. Show your calculations and provide a proper management explanation to support the decision. 4. Please provide a proper business/qualitative explanation for both point 2 and 3.Question 1 (30%) A manufacturing company has two Divisions: Amateur and Pro. Estimated activity for the next year is: Amateur Pro Company Total Division Division (Amateur + Pro) Direct Labour hours: 9,000 hrs 1,000 hrs 10,000 hrs Maching Hours: 2,700 hrs 600 hrs 3,300 hrs Units Produced: 800 units 100 units 900 units Production Batches: 1 batch 49 batches 50 batches Costs: Labour: $144,000 Set-ups: $ 7,500 Machining: 33.000 Total costs: $184,500 Other information: The Amateur division makes products on a continual basis throughout the year. The Pro division makes products in batches based on demand. . Both divisions use the same machines and the same employees. There are no materials. . . A set-up is required for each production batch. . Machining costs are allocated based on Machine hours. Required: 1. Assume that the company allocated an equal amount to each unit. What is the estimated cost of a unit for each of the Amateur and a unit Pro? 2. Assume that the company allocates total costs based on a single cost pool, and allocates these costs based on Direct Labour Costs. What is the estimated cost of a unit of Amateur and a unit of Pro. 3. What is the estimated cost of a unit for of a unit of Amateur and a unit Pro, if the company uses Activity Based Costing? 4. What is your decision-making interpretation for each of the scenarios