50 UMADSS-15 3 IAN 22 Exam Paper (Online) - Word Sign in ta File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do 2. Share ... ET X Out Copy Paste *Format Painter Clipboard Calibri (Body - 12 ( - Aa- A BIU - * * .". A. d 1 1 Caption 1 List Para. I Nomal 1 No Spac. Heading 1 1 Title Subtitle Subtle Em Emphasis Find - Replace Select = = = = ..= 1 = Font Paragraph Styles Editing Question 7 B Ltd has just finalised figures for the production and sale of its new 'Homedesk', designed for use by workers who are working from home much more than they used to, due to the post-pandemic 'new normal'. B Ltd buys in wood and appliances' adapters, which are then assembled by salaried staff into the finished desk. Budgeted sales price and standard variable costs for each 'Homedesk' are as follows f 100.00 Standard sales price (per desk) Standard costs (per desk): Material input: Wood (2 kilograms at 10.00 per kilogram) Adapters (1 adapter at 35.00 per adapter) 20.00 35.00 (55.00) Standard contribution (per unit) 45.00 BLtd planned on making and selling 10,000 'Homedesks' during the year ended 31st December 2021. Fixed costs, including salaries, are not absorbed into unit costs and were budgeted to be 120,000 for the year ended 31 December 2021. The actual revenue and costs of the 'Homedesk for the year have now been calculated: f 1,045,000 Sales revenue (11,000 desks produced and sold) Costs: Material input: Wood (26,400 kilograms purchased and used) 237,600 Page 5 of 13 35 of 2471 words IG 1104 Type here to search o (22 64F Mostly sunny 2:36 PM 1/18/2022 50 UMADSS-15-3 IAN 22 Exam Paper (Online) - Word Sign in ta File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do 2. Share E' E X Out Copy Paste *Format Painter Clipboard Calibri (Body - 12 ) 12XA - An BIU - * * .". A. d 1 Caption List Para... 1 Normal 1 No Spac Heading 1 . Subtitle Subtle Em Emphasis Find - Replace Select = = = = SE, Title = Font Paragraph Editing Slyes 1,045,000 Sales revenue (11,000 desks produced and sold) Costs: Material input: Wood (26,400 kilograms purchased and used) Adapters (11,000 adapters) 237,600 407.000 Actual contribution Less: Fixed Costs Actual profit (644,600) 400,400 (105,000) 295,400 Using these figures, B Ltd's management accountant has calculated the following variances: f Favourable Adverse 45,000 55,000 26,400 Sales volume Sales price Wood (input) price Wood (input) usage Adapter price Adapter usage Fixed costs expenditure 44,000 22,000 nil nil 15,000 A Just in Time inventory purchasing and production policy means that B Ltd holds no opening or closing inventory of the wood or adapter inputs, or the 'Homedesk'. continued over UMAD5S-15-3 Page 10 of 13 Page 5 of 13 35 of 2471 words 5 IG 1104 Type here to search OH (22 64F Mostly sunny 2:36 PM 1/18/2022 50 UMADSS-15-3 IAN 22 Exam Paper (Online) - Word Sign in ta File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do 2. Share X Out Copy Paste *Format Painter Clipboard Find - Replace Select ... = Calibri (Body - 12 A - Air E. E AT d BIU XX A.A. = = = = 1 Caption 1 List Para... Nomal 1 No Spac Heading 1 Title Subtitle Subtle Em Emphasis Paragraph Some initial comments have been received about performance in respect of 'Homedesk' for the year: Font Slyes Editing The sales director is demanding a bonus for the team because of the higher than expected number of desks that have been sold; The purchasing manager for the wood input says that he has saved the company money by buying in the wood at lower cost than budgeted; The purchasing manager for the adapters argues that her team deserves a share of any bonus as the team has contributed to the saving in fixed costs. Required (a) In so far as can be ascertained from the information provided, use the variances to comment on the performance of the sales director, and both of the purchasing managers, and reach a conclusion as to the overall performance of B ltd's 'Homedesk' in 2021. (14 marks) (maximum for (a) 700 words) The financial controller of B Ltd has pointed out that, due to constantly changing market prices for inputs, variances should be separated into their planning and operational variances. (b) Explain why it is important to separate variances into their planning and operational elements for a company such as B Ltd. (5 marks) (maximum for (b) 250 words) (c) Discuss the issues to be considered when operating a Just in Time inventory purchasing policy at B Ltd. (6 marks) Imaximum for (c) 300 words) Page 5 of 13 35 of 2471 words IG 1104 Type here to search O o PH 2 64F Mostly sunny 2:37 PM 1/18/2022