B C D E F G 1 Standard Costing (38 marks) 2 After graduation from the Business Accounting program at Algonquin college, you proudly accepted a well paying position as a cost accountant for 3 Serenade Manufacturing located in London, Ontario. The following is the standard card for the company's only product: 4 5 Manufacturing Costs 6 7 Direct materials (metres) 8 Direct labour (DL Hrs) 9 Variable overhead (DL Hrs) 10 Fixed overhead (DL Hrs) 11 Standard cost per unit 12 Standard Qty or Standard Price Standard Cost Hrs or Rate per Unit 4.0 $ 4.00 $ 16.00 1.5 $ 10.00 15.00 1.5 $ 3.00 4.50 1.5 $ 7.88 11.81 $ 47.31 20,000 $ 157,500 H J K 13 Denominator activity level monthly (DL Hrs) 14 Budgeted Fixed overhead costs monthly 15 16 For the past month of February 2022, the company proudly manufactured and sold 18,125 units. Variable and fixed manufacturing 17 overhead costs are applied to products on the basis of direct labour hours. All raw materials are direct materials, there are no indirect 18 materials. Additional actual manufacturing results, provided from the Controller, Emily Palmer, include: 19 20 Direct materials purchased (metres) 21 Beginning inventory of direct materials (metres) 22 Ending inventory of direct materials (metres) 23 Direct labour 24 Fixed overhead costs 25 Variable overhead costs Metres or Hours S 70,150 $ 4.20 per metre 22,100 22,000 29,300 $ 9.75 per hour $ 154,875 72,500 $ 90,000 70,250 26 27 28 Required: 29 Ms Palmer has asked you to determine the following results for February 2022. INSTRUCTIONS Residual Income & ROI | Segment Reporting & CVP Standard Costing 2250 F14 51 2. For direct labour: B C D E F G H 52 a. Rate and efficiency variances 53 54 55 b. Journal entry to record labour activity Rate Variance Efficiency Variance 56 57 58 59 60 61 62 63 Journal Entry Accounts Dr Cr 64 65 66 3. Variable overhead spending and efficiency variances 67 68 69 70 To record the Direct Labour Spending Variance Efficiency Variance 71 4. Fixed overhead budget and volume variances 72 73 74 75 76 77 78 79 Budget Variance Volume Variance 2 The contribution format income statement for Sarasota & Company for its year ended February 28, 2022 is given below: Sales units 3 4 5 Sales 6 7 Variable expenses Contribution margin 8 Fixed expenses 9 Operating income 10 Income taxes @ 40% 11 10,000 Total Per Unit $ 512,500 $ 51.25 300,000 30.00 212,500 $ 21.25 150,000 62,500 25,000 $ 37,500 12 Net income 13 During the year the company had average operating assets of $ 250,000 14 The company's overall minimum required rate of return is 15 16 Required: 14% 17 1(a). Compute the company's ROI for the period using the ROI formula stated in terms of margin and turnover. 18 19 20 21 22 Margin Turnover R.O.I. 23 1(b). Compute the company's residual income 24 For each of the following questions, calculate the new ROI and residual income. Consider each question separately, 25 starting in each case from the original ROI and Residual Income computed in (1) above