The following questions are based on the data contained in Exhibit 12-9. 1. Suppose actual production and

Question:

The following questions are based on the data
contained in Exhibit 12-9.
1. Suppose actual production and sales were 8,000 units instead of 7,000
units. (a) Compute the sales-volume variance. Is the performance of
the marketing function the sole explanation for this variance? Why?
(b) Using a flexible budget, compute the budgeted contribution margin,
the budgeted operating income, budgeted direct material, and budgeted
direct labour.
2. Suppose the following were the actual results for the production of
8,000 units:
Direct material: 42,000 kilograms were used at an actual unit price
of $1.85, for a total actual cost of $77,700.
Direct labour: 4,125 hours were used at an actual hourly rate of
$16.40, for a total actual cost of $67,650.
Compute the flexible-budget variance and the price and usage variances
for direct materials and direct labour. Present your answers in
the form shown in Exhibit 12-5.
3. Suppose the company is organized so that the purchasing manager
bears the primary responsibility for the acquisition prices of materials,
and the production manager bears the primary responsibility for efficiency
but no responsibility for unit prices. Assume the same facts as in
requirement 2 except that the purchasing manager acquired 60,000
kilograms of materials at $1.85 per kilogram. This means that there is
an ending inventory of 18,000 kilograms. Would your variance analysis
of materials in requirement 2 change? Why? Show computations.