ACW27L MANAGEMENT ACCOUNTING II TOPIC 4 TUTORIAL Question 1 The following profit reconciliation statement summarizes the performance of one of SEWS products for March. Budgeted profit Sales volume variance Standard profit on actual sales Selling price variance RM 4250 850(0) 3 400 4 000(U) (600) Cost variances: (U) (RM) (F) (RM) 1 000 Direct material price Direct material usage Direct labour rate Direct labour efficiency Variable overhead expenditure Variable overhead efficiency Fixed overhead efficiency Fixed overhead volume Actual profit 150 200 150 600 75 2 500 150 3 650 1 175 2475 (F) 1 875 1 500 units RM20 000 1 500 units 750kg The budget for the same period contained the following data: Sales volume Sales revenue Production volume Direct materials purchased Direct materials used material cost Direct labour hours Direct labour cost Variable overhead cost Fixed overhead cost 750kg Direct RM4 500 1 125 RM4 500 RM2 250 RM4 500 . Additional information: Stocks of raw materials and finished goods are valued at standard cost; during the month the actual number of units produced was 1550; the actual sales revenue was RM12 000; the direct materials purchased were 1000kg. Required: Calculate i. 11. ini, The actual sales volume; The actual quantity of materials used: The actual direct matcrial cost; iv. V. The actual direct labour hours: The actual direct labour cost; The actual variable overhead cost; The actual fixed overhead cost. vi vii. Question 2 HB makes and sells a single product. The company operates a standard marginal costing system and a just-in-time purchasing and production system. No inventory of raw materials or finished goods is held. Details of the budget and actual data for the previous period are given below: Budget data Standard production costs per unit: Direct material 8kg @ RM10.80 per kg Direct labour 1.25 hours @ RM18.00 per hour Variable overheads 1.25 hours @ RM6.00 per direct labour hour RM 86.40 22.50 7.50 Standard selling price: RM180 per unit Budgeted fixed production overheads: RM170 000 Budgeted production and sales: 10 000 units Actual data Direct material: 74 000kg @RM11.20 per kg Direct labour: 10 800 hours @ RM19.00 per hour Variable overheads: RM70 000 Actual selling price: RM184 per unit Actual fixed production overheads: RM168 000 Actual production and sales: 9000 units Required: Prepare a statement using marginal costing principles that reconciles the budgeted profit and the actual profit. Your statement should show the variances in as much detail as possible. Question 3 Valet Co is a cat' valcting (cleaning) company. It operates in the country of Strappia, which has been badly affected by the global financial crisis. Petrol and food prices have increased substantially in the last year and the average disposable household income has decreased by 30 per cent. Recent studies have shown that the average car owner keeps their car for five years before replacing it, rather than three years as was previously the case. Figures over recent years also show that car sales in Strappia are declining whilst business for car repairs is on the increase Valet Co offers two types of valet - a full valet and a inini valet. A full valet is an extensive clean of the vehicle, inside and out; a mini valet is a more basic clean of the vehicle. Until recently, four similar businesses operated in Valet Co's local area, but one of these closed down three months ago after a serious fire on its premises. Valet Co charges customers RM50 for 2 each full valet and RM30 for each mini valet and this price never changes. Their budget and actual figures for the last year were as follows: Number of valet Full valets Mini valets Budget 3 600 2 000 Actual 4 000 3 980 RM RM RM 240 000 RM 319 400 Revenue Variable costs: Staff wages Cleaning materials Energy costs (114 000) (6 200) (6 520) (122 000) (12 400) (9 200 (126 720) 113 280 (143 600) 175 800 Contribution Fixed costs: Rent, rates and depreciation Operating profit (36 800) 76 480 (36 800) 139 000 The budgeted contribution to sales ratios for the two types of valet are 44.6 per cent for full valets and 55 per cent for mini valets. Required: (a) Using the data provided for full valets and mini valets, calculate: (1) The total sales mix contribution variance; (ii) The total sales quantity contribution variance. (b) Briefly describe the sales mix contribution variance and the sales quantity contribution variance. (C) Discuss the SALES performance of the business for the period, taking into account your calculations from part (a) AND the information provided in the scenario. 3