b) Do a level 2 comparison below: (hint: breakup variable cost of goods sold into DM, DL & VOH) ACC 321 Group Project (chapters 7 & 8) Erle Company's lonton Plant produc precast inyols for Industrial use. Carlos Santiago, who was recently appointed plant manager of 1 the Fronton Plant, has just been handed the plant income statement for October. The statu- ment is shown below: Rugell. Actual Sales (3,600 Ingols) .......... $250,000 $250,000 Lesus wariable expenses! Warlublu cast of goods sold in. 80,000 06,390 Variable selling expenses. 20,000 20,000 Tonal variable expenses -- 100.000 116,390 Contribution margin ..... 150,OCCI 133.610 Loss in epic Manufncluring verlend ........... 00,000 60,000 Sulling and adminisinitive ... 75,000 75,000 Tural fixed expenses .... 135,000 135,000 Not incxm (less) .... S 15,000 $ (1,390) c) What appears to be a problem area for the plant? "Conta direct aterials, direct labor, and variable facturing over head. Mc Santiago was shocked to see the loss for the month, particularly since sales were Exuctly as budgeted. He slated, "I sure hope the plant has a standard cost system in opera- tion. If it docan'l, I won't have the slightest idea of where la stari looking for the problem." The plant does use a standard cost system, with the following standard variable cost per ingot: Standard Quantity Standard Price Standard or Hours or Rate Cast Direct muterials.r. 4.0 pounds $2.50 per pound $10.00 0.6 lours $9.00 per hour Variabile manufacturing overhead ... 0.3 hours $2.00 per hour Toinl standard variable cost .... $16.00 0.60 d) What anayisis could we do to get better detail on what is causing the problem in c)? Dan on machine-hours. Mr. Santiago has determined that during October the plani produced 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 no row materials in inventory at the beginning of the month. b, Used 19,800 pounds of materials in production. (Finished goods and work in proces inventories are insignificant and can be ignored.) = $58,410 c. Worked 3,600 direct labor-hours at a cost of $8.70 per liour. = $33,480 d. Incurred a total variable manufacturing over head cost of $4,500 for the month. A totul of 1,800 machinc-hours was recorded. a) Do a Level 1 comparison here but remember only doing it for a responsibility center - plant manager Unit Static Actual Static Cost Budget Results Budget Units Produced & sold Variable cost of goods sold Fixed mfg. overhead Direet mat Direet Laar Mig at b) Do a level 2 comparison below: (hint: breakup variable cost of goods sold into DM, DL & VOH) ACC 321 Group Project (chapters 7 & 8) Erle Company's lonton Plant produc precast inyols for Industrial use. Carlos Santiago, who was recently appointed plant manager of 1 the Fronton Plant, has just been handed the plant income statement for October. The statu- ment is shown below: Rugell. Actual Sales (3,600 Ingols) .......... $250,000 $250,000 Lesus wariable expenses! Warlublu cast of goods sold in. 80,000 06,390 Variable selling expenses. 20,000 20,000 Tonal variable expenses -- 100.000 116,390 Contribution margin ..... 150,OCCI 133.610 Loss in epic Manufncluring verlend ........... 00,000 60,000 Sulling and adminisinitive ... 75,000 75,000 Tural fixed expenses .... 135,000 135,000 Not incxm (less) .... S 15,000 $ (1,390) c) What appears to be a problem area for the plant? "Conta direct aterials, direct labor, and variable facturing over head. Mc Santiago was shocked to see the loss for the month, particularly since sales were Exuctly as budgeted. He slated, "I sure hope the plant has a standard cost system in opera- tion. If it docan'l, I won't have the slightest idea of where la stari looking for the problem." The plant does use a standard cost system, with the following standard variable cost per ingot: Standard Quantity Standard Price Standard or Hours or Rate Cast Direct muterials.r. 4.0 pounds $2.50 per pound $10.00 0.6 lours $9.00 per hour Variabile manufacturing overhead ... 0.3 hours $2.00 per hour Toinl standard variable cost .... $16.00 0.60 d) What anayisis could we do to get better detail on what is causing the problem in c)? Dan on machine-hours. Mr. Santiago has determined that during October the plani produced 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 no row materials in inventory at the beginning of the month. b, Used 19,800 pounds of materials in production. (Finished goods and work in proces inventories are insignificant and can be ignored.) = $58,410 c. Worked 3,600 direct labor-hours at a cost of $8.70 per liour. = $33,480 d. Incurred a total variable manufacturing over head cost of $4,500 for the month. A totul of 1,800 machinc-hours was recorded. a) Do a Level 1 comparison here but remember only doing it for a responsibility center - plant manager Unit Static Actual Static Cost Budget Results Budget Units Produced & sold Variable cost of goods sold Fixed mfg. overhead Direet mat Direet Laar Mig at