Can you please explain why each of the variances occured and tie them together in a short paragraph. Thank you!
PROBLEM: Mascot Mfg, makes costumes for athletic team mascots and uses a standard costing systern. The company recognizes (isolates) materials price variances at the time the materials are purchased. They allocate (apply) OH based on # of DL hours. Following are this year's cost and standards data; assumes 52 weeks per year. Actual cost and data from the current month: Actual number of yards of materials purchased 28,500 Actual cost of materials purchased $ 810,000 $ 28.42 per yd Actual number of yards used in production 27,350 Actual number of costumes produced 2,300 Actual direct labor hours 133,500 Actual direct labor cost $ 5,500,000 $ 41.20 per hr Actual variable MOH (In total) $ 665,000 Actual fixed MOH (in total) $ 1,488,000 12.50 yards 26.00 average $ Standards (for a planned level of production of 2,200 units per month) Direct Materials: Yards per costume Price per yard Direct Labor D.L. Hours per costume D.L. Rate per hour Variable MOH standard rate per direct labor hour Fixed MOH standard rate per direct labor hour Total Budgeted Fixed MOH (for 1 month) 62.00 hours 44.50 average $ 4.35 per D.L. hour $ 9.47 per D.L. hour $ 1,250,000 23 A C D Templates Direct Materials Actual Actual input Guantity Flexible Cost Bureted std Price Budget Applied) Given Purchases Up S810,000 $1.000 SO100 $147.500 28.500 520 (2235056 2.300 units 12.30 yard:526) $69.000 untsvorable $26.400 wable Price Variance Efficiency Variance NOTE: There is no "total" versante because Price in cewe measured at different times for DM. Director Actual Actual input Quantity Flexible Cost xBudgeted (td Rate Budget (Applied Given $5,500,000 $5.900,730 $1,145,700 (233,500 44.0 12.300 units2h.544.50 $440,750 Favorable 5404.950 Favorable Price Variance Efficiency Variance 145.200 Yle Flexible Budget (TOTAL) Variance Variable Manufacturing Overhead She ShtSheet 3 Gene Merge Center S. BE Home net Pro For Au Calibri Coo farm Frt Font 147 f C D Flexible Budget (TOTAL) Variance 2 Canon Format CH Forang asosiy . o K Actual Cost Incurred Variable Manufacturing Overhead Actual Input wantity * Budgeted State Flexible Budet Applied Allected 5620,310 $520,310 12.300 6254.35) $19.50 Favorable Efficiency Variance 5665,000 $580,725 (133,500 hrs 54.35) $84.27 Untworable Spending Variance 544.600 Unable Flexible Budget (TOTAL) Variance Fixed Manufacturing Overhead Actual Cost Incurred Static FOH Budget Same as Static Allocated $1.48.000 $1,250,000 51,250,000 $238.000 unfavorable Spending Variance $1,264,45 (131.500 $9.47) 514.20 favorable Production Volume Variance $223,755 Unfavor TOTAL Feed On Variance Sheet1 Sheet2 Sheet Requirement #2 Write a one page letter summarizing: 1. What the variances mean, and 2. What conclusion do you draw from the variances? Grading for the written part (Requirement #2) is a little more subjective. For the 2 parts in Requirement #2: 1. Identify the issues implied by the variances and tell what they mean. 2. Reach a conclusion and make a recommendation There is a sample letter on CANVAS/Files/assignments. The sample is for form only (not content). The sample letter is a transmittal letter (it accompanies a report or proposal). Your letter is not a transmittal letter. Your letter: Identifies issues, and Reaches a conclusion and makes a recommendation (1 and 2 above). Write your letter to me. Your letter should be no more than one page (12 point). After the closing (Best regards), add your name and student ID. You should write your letter using short: Words Sentences Paragraphs . Avoid embedded lists. Rather, use bullet lists as above April 23, 2014 Mr. Bill Sampl Sampl Oil Company 105 N Hudson Ave Oklahoma City, OK 73102 Dear Mr. Sampl: Bobcat Consulting Group (BCG) is pleased to submit a report regarding Sampl Oil Company's request for the analysis and recommendation of an oil and gas specific Accounting Information System (AIS). This report includes the results of BCG's analysis as well as the recommendation of an AIS. The attached report covers in detail our: Executive Summary; Introduction; Approach; Analysis & General Observations; & Recommendations and Justifications. We would like to thank you for your commitment and participation as we conducted our research and analysis on this important engagement. We are confident that Sampl Oil Company will find our recommendation beneficial and that its implementation will allow your company to become more successful in achieving its mission and objectives. Best regards, Jack Finley Bobcat Consulting Group PROBLEM: Mascot Mfg, makes costumes for athletic team mascots and uses a standard costing systern. The company recognizes (isolates) materials price variances at the time the materials are purchased. They allocate (apply) OH based on # of DL hours. Following are this year's cost and standards data; assumes 52 weeks per year. Actual cost and data from the current month: Actual number of yards of materials purchased 28,500 Actual cost of materials purchased $ 810,000 $ 28.42 per yd Actual number of yards used in production 27,350 Actual number of costumes produced 2,300 Actual direct labor hours 133,500 Actual direct labor cost $ 5,500,000 $ 41.20 per hr Actual variable MOH (In total) $ 665,000 Actual fixed MOH (in total) $ 1,488,000 12.50 yards 26.00 average $ Standards (for a planned level of production of 2,200 units per month) Direct Materials: Yards per costume Price per yard Direct Labor D.L. Hours per costume D.L. Rate per hour Variable MOH standard rate per direct labor hour Fixed MOH standard rate per direct labor hour Total Budgeted Fixed MOH (for 1 month) 62.00 hours 44.50 average $ 4.35 per D.L. hour $ 9.47 per D.L. hour $ 1,250,000 23 A C D Templates Direct Materials Actual Actual input Guantity Flexible Cost Bureted std Price Budget Applied) Given Purchases Up S810,000 $1.000 SO100 $147.500 28.500 520 (2235056 2.300 units 12.30 yard:526) $69.000 untsvorable $26.400 wable Price Variance Efficiency Variance NOTE: There is no "total" versante because Price in cewe measured at different times for DM. Director Actual Actual input Quantity Flexible Cost xBudgeted (td Rate Budget (Applied Given $5,500,000 $5.900,730 $1,145,700 (233,500 44.0 12.300 units2h.544.50 $440,750 Favorable 5404.950 Favorable Price Variance Efficiency Variance 145.200 Yle Flexible Budget (TOTAL) Variance Variable Manufacturing Overhead She ShtSheet 3 Gene Merge Center S. BE Home net Pro For Au Calibri Coo farm Frt Font 147 f C D Flexible Budget (TOTAL) Variance 2 Canon Format CH Forang asosiy . o K Actual Cost Incurred Variable Manufacturing Overhead Actual Input wantity * Budgeted State Flexible Budet Applied Allected 5620,310 $520,310 12.300 6254.35) $19.50 Favorable Efficiency Variance 5665,000 $580,725 (133,500 hrs 54.35) $84.27 Untworable Spending Variance 544.600 Unable Flexible Budget (TOTAL) Variance Fixed Manufacturing Overhead Actual Cost Incurred Static FOH Budget Same as Static Allocated $1.48.000 $1,250,000 51,250,000 $238.000 unfavorable Spending Variance $1,264,45 (131.500 $9.47) 514.20 favorable Production Volume Variance $223,755 Unfavor TOTAL Feed On Variance Sheet1 Sheet2 Sheet Requirement #2 Write a one page letter summarizing: 1. What the variances mean, and 2. What conclusion do you draw from the variances? Grading for the written part (Requirement #2) is a little more subjective. For the 2 parts in Requirement #2: 1. Identify the issues implied by the variances and tell what they mean. 2. Reach a conclusion and make a recommendation There is a sample letter on CANVAS/Files/assignments. The sample is for form only (not content). The sample letter is a transmittal letter (it accompanies a report or proposal). Your letter is not a transmittal letter. Your letter: Identifies issues, and Reaches a conclusion and makes a recommendation (1 and 2 above). Write your letter to me. Your letter should be no more than one page (12 point). After the closing (Best regards), add your name and student ID. You should write your letter using short: Words Sentences Paragraphs . Avoid embedded lists. Rather, use bullet lists as above April 23, 2014 Mr. Bill Sampl Sampl Oil Company 105 N Hudson Ave Oklahoma City, OK 73102 Dear Mr. Sampl: Bobcat Consulting Group (BCG) is pleased to submit a report regarding Sampl Oil Company's request for the analysis and recommendation of an oil and gas specific Accounting Information System (AIS). This report includes the results of BCG's analysis as well as the recommendation of an AIS. The attached report covers in detail our: Executive Summary; Introduction; Approach; Analysis & General Observations; & Recommendations and Justifications. We would like to thank you for your commitment and participation as we conducted our research and analysis on this important engagement. We are confident that Sampl Oil Company will find our recommendation beneficial and that its implementation will allow your company to become more successful in achieving its mission and objectives. Best regards, Jack Finley Bobcat Consulting Group
