The packaged meal division of the Quick-Foods Corporation produces a variety of a packaged meals like...

Transcribed Image Text:

The packaged meal division of the Quick-Foods Corporation produces a variety of a packaged meals like Chicken Korma and Tikka Masala that are shelf stable at room temperature. The company is in its annual merit review process where individual, responsibility center as well as companywide performance is assessed. Sales Less operating expenses Advertising Budget* C. $63,000 9,600 Direct labor Actual 4,725 8,400 14,800 4,600 $65,800 9,000 Less production expenses Direct Materials Direct labor Variable Overhead Rent on Equipment Income from operations 20,875 * All variable costs have been flexed for the budget column Required: a. Complete the performance report, then speculate on a possible cause for each variance (except for direct materials and direct labor) and then suggest a follow-up action for those variances. 4,851 9,250 12,000 4,000 26,699 Budget Variance 2,800 Standards Direct materials Each unit should have 1/8 600 126 850 2,800 600 b. In order to get a better control over the amounts spent on direct materials and direct labor, the company had previously implemented the following standards and achieved the corresponding results when 126,000 units were produced: 5,824 pound of direct materials purchased at $0.30 per pound. Last year when the packaged meal division (i.e. investment center) had a return on investment (ROI) target of 8% and an actual ROI of 8.2 percent, the company paid a year- end bonus of $250 to each employee in the division. This year due to anticipated economic growth in general, the ROI target was raised to 9.5 percent. The division has invested assets at the end of the year of $260,000. Each unit should be produced in 20 seconds at a direct labor cost of $12 per hour. Actual Results Actual production used 17,325 pounds of direct materials at an average cost of $0.28 per pound. Actual production required 740 direct labor hours at an average cost of $12.50 per hour. Calculate the price, quantity and total manufacturing variance for direct materials and direct labor; as needed, round final calculations (i.e. each variance) to the nearest whole dollar. Given your results, speculate on a possible cause for each price and quantity variance and suggest a follow-up action for each variance. How much of a year-end bonus (if any) would you give to each employee? Briefly explain why. The packaged meal division of the Quick-Foods Corporation produces a variety of a packaged meals like Chicken Korma and Tikka Masala that are shelf stable at room temperature. The company is in its annual merit review process where individual, responsibility center as well as companywide performance is assessed. Sales Less operating expenses Advertising Budget* C. $63,000 9,600 Direct labor Actual 4,725 8,400 14,800 4,600 $65,800 9,000 Less production expenses Direct Materials Direct labor Variable Overhead Rent on Equipment Income from operations 20,875 * All variable costs have been flexed for the budget column Required: a. Complete the performance report, then speculate on a possible cause for each variance (except for direct materials and direct labor) and then suggest a follow-up action for those variances. 4,851 9,250 12,000 4,000 26,699 Budget Variance 2,800 Standards Direct materials Each unit should have 1/8 600 126 850 2,800 600 b. In order to get a better control over the amounts spent on direct materials and direct labor, the company had previously implemented the following standards and achieved the corresponding results when 126,000 units were produced: 5,824 pound of direct materials purchased at $0.30 per pound. Last year when the packaged meal division (i.e. investment center) had a return on investment (ROI) target of 8% and an actual ROI of 8.2 percent, the company paid a year- end bonus of $250 to each employee in the division. This year due to anticipated economic growth in general, the ROI target was raised to 9.5 percent. The division has invested assets at the end of the year of $260,000. Each unit should be produced in 20 seconds at a direct labor cost of $12 per hour. Actual Results Actual production used 17,325 pounds of direct materials at an average cost of $0.28 per pound. Actual production required 740 direct labor hours at an average cost of $12.50 per hour. Calculate the price, quantity and total manufacturing variance for direct materials and direct labor; as needed, round final calculations (i.e. each variance) to the nearest whole dollar. Given your results, speculate on a possible cause for each price and quantity variance and suggest a follow-up action for each variance. How much of a year-end bonus (if any) would you give to each employee? Briefly explain why.

Answer rating: 100% (QA)

QUESTION A Sales Variance Budget 63000 Actual 65800 Variance 2800 Favorable Possible Cause Improved sales performance or effective pricing strategies Followup Action Conduct a detailed analysis to ide... View the full answer