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MANAGEMENT ACCOUNTING GROUP BUSINESS CASE ANALYSIS Term 2, Academic Year 2020-2021 Delcatty Design Company manufactures expensive brass doorknobs. It has total assets amounting to P2,500,000 and liabilities of P1,500,000. The fixed costs of producing and marketing the doorknob is P250,000. The variable costs per unit are the manufacturing costs (materials, labor and overhead) and marketing costs of P500 per unit. The normal selling price of a doorknob is P2,200. After careful study of the production, it was determined that manufacturing overhead was closely related to material usage. Thus, manufacturing overhead to production is allocated based on pounds of materials used. The following are the production STANDARDS: Input Cost / Doorknob Direct Material (brass) 0.3 lbs. at P117 / lb. P 35.10 Direct Labor 0.75 hrs. at P200 / hr. 150.00 Variable Manufacturing overhead P60 / lb. x 0.3 1b. 18.00 ACTUAL results for July 2017 are as follows: Production 35,000 doorknobs Direct Material Purchased 10,550 lb. at P120 / lb. Direct Materials Used 10,400 lbs. Direct Labor 26,225 hrs. for P5,271,200 Variable Manufacturing overhead P641,500 As a managerial accountant and business analyst for Del catty, the undertakings are as follows: A. Flexible-budget variances. Ascertain whether each is favorable (F) or unfavorable (U) and recommendations for improvement. (1) Materials Price Variance P (2) Raw Materials Inventory (3) Materials Quantity/ Usage Variance (4] Labor Rate Variance (5) Labor Efficiency Variance (6) Variable MOH Rate Variance (7) Variable MOH Efficiency Variance:C. Special order. An order has been received from an overseas customer for 1,000 units to be delivered this month. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable marketing cost would be 20% less per unit on this order than on normal sales. Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is at a discounted price of 25% less than its normal selling price per unit. (15) By how much would this special-order increase (decrease] the company's net operating income for the month? P