Kiwi Company produces automobiles. It had budgeted sales and production of 10,000 cars for 2016 at a selling price of $5000 each. The company had budgeted the following costs for 2016 : The company actually sold 11,000 cars for $4800 each. Suppose that at the end of the year the financ Required 1. What were budgeted profits for 2016 ? What were actual profits? What was the overall variance in profits? Did the company overall perform better or worse than expected? 2. Compute total master budgets and actuals for: (a) revenues (b) variable manufacturing costs (c) variable selling and admin costs. (d) fixed manufacturing costs (e) fixed selling and admin costs Which line items were responsible for the overall profit variance? 3. Compute flexible budgets for: (a) revenues (b) variable manufacturing costs (c) variable selling and admin costs' (d) fixed manufacturing costs (e) fixed selling and admin costs 4. Compute selling price and volume variances for revenues? 5. Compute volume variances and combined price/efficiency variances for variable costs. 6. What is the volume variance for fixed manufacturing costs? 7. Kiwi has two responsibility centers: production and sales. Production is responsible for efficiently purchasing for and producing the necessary amount of production. Sales is responsible for pricing and therefore the amount sold, as well as for controlling selling and administrative costs. Which combination of variances would you use to evaluate the two departments? Which variances would you view as uncontrollable? Each year a cash bonus of $1000 per person is paid to all the individuals in the department (production or sales) which performed most above expectations. Which department will receive the 2016 bonuses? One of the variable production costs is the cost of steel. The standards for steel purchase prices and ueara os eat at tho harinnins of 3016 wara. Recall that budgeted production for the year was 10,000 cars, while actual production was 11,000. Required 1. Were total steel costs for 2016 greater or less than expected? By how much? 2. How much of a difference should have been observed due to the production level being higher than expected? How much difference is still unexplained? 3. The purchasing department is responsible for efficiently purchasing as much steel as the production department needs. What was the average price per pound at which steel was purchased? Did the purchasing department perform well? 4. The production department is responsible for efficiently using the steel to produce the necessary level of output. What was the average number of pounds of steel used to produce each car in 2016? Did the production department perform well? 5. At the end of the year a cash bonus of 5% of performance above expectations is split among the members of the relevant departments. Performance above expectations is defined in terms of impact on total profits. What was the impact of the production department's production activities on the company's overall profits? What was the impact of the purchasing department's activities on the company's overall profits? Which department if any will receive a bonus? What size will that bonus pool be? 6. Are there any caveats in the performance evaluation mechanism used in question 5 ? Kiwi Company produces automobiles. It had budgeted sales and production of 10,000 cars for 2016 at a selling price of $5000 each. The company had budgeted the following costs for 2016 : The company actually sold 11,000 cars for $4800 each. Suppose that at the end of the year the financ Required 1. What were budgeted profits for 2016 ? What were actual profits? What was the overall variance in profits? Did the company overall perform better or worse than expected? 2. Compute total master budgets and actuals for: (a) revenues (b) variable manufacturing costs (c) variable selling and admin costs. (d) fixed manufacturing costs (e) fixed selling and admin costs Which line items were responsible for the overall profit variance? 3. Compute flexible budgets for: (a) revenues (b) variable manufacturing costs (c) variable selling and admin costs' (d) fixed manufacturing costs (e) fixed selling and admin costs 4. Compute selling price and volume variances for revenues? 5. Compute volume variances and combined price/efficiency variances for variable costs. 6. What is the volume variance for fixed manufacturing costs? 7. Kiwi has two responsibility centers: production and sales. Production is responsible for efficiently purchasing for and producing the necessary amount of production. Sales is responsible for pricing and therefore the amount sold, as well as for controlling selling and administrative costs. Which combination of variances would you use to evaluate the two departments? Which variances would you view as uncontrollable? Each year a cash bonus of $1000 per person is paid to all the individuals in the department (production or sales) which performed most above expectations. Which department will receive the 2016 bonuses? One of the variable production costs is the cost of steel. The standards for steel purchase prices and ueara os eat at tho harinnins of 3016 wara. Recall that budgeted production for the year was 10,000 cars, while actual production was 11,000. Required 1. Were total steel costs for 2016 greater or less than expected? By how much? 2. How much of a difference should have been observed due to the production level being higher than expected? How much difference is still unexplained? 3. The purchasing department is responsible for efficiently purchasing as much steel as the production department needs. What was the average price per pound at which steel was purchased? Did the purchasing department perform well? 4. The production department is responsible for efficiently using the steel to produce the necessary level of output. What was the average number of pounds of steel used to produce each car in 2016? Did the production department perform well? 5. At the end of the year a cash bonus of 5% of performance above expectations is split among the members of the relevant departments. Performance above expectations is defined in terms of impact on total profits. What was the impact of the production department's production activities on the company's overall profits? What was the impact of the purchasing department's activities on the company's overall profits? Which department if any will receive a bonus? What size will that bonus pool be? 6. Are there any caveats in the performance evaluation mechanism used in question 5