aL s41 uroup Project (chapter 7&8) b) Do a level 2 comparison below: P10-13 Basic Variance Analysis Porland Company's Iroston Plant peoduces precast ingots for industrial sse Carlos Santiago, who was recently appointed general manager of the Iroston Plant, has just been handed the plant's income staicment for October. The state- ment is shown below BudgetedActual $250000 00 Sales (3,000 ingots) Varlable cost of goods sold Variable selling expenses Toal variable expenses Contribution margin 150,000 133,600 Less faed espesses: 60,000 Mansfacturing overhead Scling and administative find expenses Nes income os) 5 15,000 (1.30) Mr. Santiago was shocked to sce the loss for the month, particularly since sales were eractly as budgeted. He stated, "I sure hope the plant has a standard cost system in opera c) What appears to be a problem area for the company? The plant does ase a standard cost system, with the following standand variable cost per Standard Quantity Standard Price Standard 40 poands 0.6 heurs 03 hours 2.50 per pound $30.00 $200 per hour Dinect labor d) What anaylsis could we do to get better detail on what is 16.00 causing the problem in c)? on machine-rs Mr. Santiago has determined that during October the plant prodaced 5,000 ingots and incurred the following costs: a. Purchased 25,000 pounds of materials at a cost of $2.95 per pound. There were so raw materials in inventory at the beginning of the month. b Uhed 19,800 poonds of materials in production. (Finished goods and work in process d Incurred a total variable manufacturing overhead cost of $4,320 for the month. A total Ir is the compasy's policy to close all variances to cost of goods sold on a monthly basis inventorics are insignificant and can be ignored.) c. Worked 3,600 direct labor hours at a cost of $8.70 per hour of 1,800 machine-hours was recorded a) Do a level 1 comparison right up here using income statement presented in problem. aL s41 uroup Project (chapter 7&8) b) Do a level 2 comparison below: P10-13 Basic Variance Analysis Porland Company's Iroston Plant peoduces precast ingots for industrial sse Carlos Santiago, who was recently appointed general manager of the Iroston Plant, has just been handed the plant's income staicment for October. The state- ment is shown below BudgetedActual $250000 00 Sales (3,000 ingots) Varlable cost of goods sold Variable selling expenses Toal variable expenses Contribution margin 150,000 133,600 Less faed espesses: 60,000 Mansfacturing overhead Scling and administative find expenses Nes income os) 5 15,000 (1.30) Mr. Santiago was shocked to sce the loss for the month, particularly since sales were eractly as budgeted. He stated, "I sure hope the plant has a standard cost system in opera c) What appears to be a problem area for the company? The plant does ase a standard cost system, with the following standand variable cost per Standard Quantity Standard Price Standard 40 poands 0.6 heurs 03 hours 2.50 per pound $30.00 $200 per hour Dinect labor d) What anaylsis could we do to get better detail on what is 16.00 causing the problem in c)? on machine-rs Mr. Santiago has determined that during October the plant prodaced 5,000 ingots and incurred the following costs: a. Purchased 25,000 pounds of materials at a cost of $2.95 per pound. There were so raw materials in inventory at the beginning of the month. b Uhed 19,800 poonds of materials in production. (Finished goods and work in process d Incurred a total variable manufacturing overhead cost of $4,320 for the month. A total Ir is the compasy's policy to close all variances to cost of goods sold on a monthly basis inventorics are insignificant and can be ignored.) c. Worked 3,600 direct labor hours at a cost of $8.70 per hour of 1,800 machine-hours was recorded a) Do a level 1 comparison right up here using income statement presented in
