Overviewof20X7results(6marks)

Prepare overview of the 20X7 results. Discuss any significant differences between the 20X7 budget and the actual figures (Exhibits 2 to 4). Base the analysis on the revised figures from requirement 1. Your analysis should include a discussion of the following:

• difference between actual and budgeted sales quantities for each product
• changes in unit selling price and effect on sales
• change in gross margin
• overall unit cost changes in direct ingredients
• changes in direct labour in relation to sales dollars
• A full variance analysis is not expected or required. Brief numerical summaries are encouraged to highlight changes.

Explanation: REQUIREMENT 1: A B C D E Cost of Product Manufactured - NORMAL COSTING IN For the year ended December 31, 2017 PARTICULARS The Bar Alamonde Salt-Lick Total 4 Direct ingredients used $ 333,507.00 $232,724.00 $129,948.00 $ 696,179.00 5 Direct Labor $ 135,876.00 $123,926.00 $ 70,338.00 $ 330,140.00 Applied Manufacturing overhead (based on 6 DLH) $ 466,930.53 $425,867.94 $241,711.91 $ 1,134,510.38 7 Total Manufacturing Costs $ 936,313.53 $782,517.94 $441,997.91 $2,160,829.38 8 ADD: Beginning Work In Process 1,196.00 $ 837.00 $ $ 2,033.00 9 LESS: Ending Work In Process -1,207.00 $ -815.00 $ ur -2,022.00 10 Cost of Goods Manufactured 936,302.53 $782,539.94 $441,997.91 $2,160,840.38 11 Add: Finished Goods Beginning 17,561.00 $ 10,702.00 $ $ 28,263.00 in 12 LESS: Ending Finished Goods -18,292.00 $ -10,497.00 $ S -28,789.00 13 Cost of Goods Sold - NORMAL COSTING $ 935,571.53 $782,744.94 $441,997.91 $2,160,314.38 14 REQUIREMENT 2: A B C D E F G H 16 ACTUAL OPERATING INCOME STATEMENT - NORMAL COSTING 17 The-Bar Per bar Alamonde Per bar Salt-Lick Per bar Total 18 Sales Volume 776,000.00 528,000.00 302,500.00 1,606,500.00 19 Sales $ 1,164,000.00 1.5 $897,600.00 1.7 $605,000.00 2 $ 2,666,600.00 20 LESS: Cost of Goods Sold $ 935,571.53 $782,744.94 $441,997.91 $ 2,160,314.38 21 Add: Over-applied MOH S 41,860.38 22 Gross Margin $ 228,428.47 $114,855.06 $163,002.09 $ 548,146.00 23 Selling and administrative expenses 541,681.00 24 Operating Income/(Loss) S 6,465.00 25 Gross Margin % 19.62% 12.80% 26.94% 20.56% 26In order to properly analyze the financial statements, the following information is also provided: Exhibit 3 Actual cost of product manufactured For the year ended December 31, 20X7 The-Bar Alamonde Salt-Lick Total Direct ingredients used $ 333,507 $ 232,724 $ 129,948 696, 179 Direct labour 135,876 123,926 70,338 330, 140 Manufacturing overhead 476,954 367,795 247,901 1,092,650 Total manufacturing costs $ 946,337 $ 724,445 $ 448, 187 $ 2, 1 18,969 Add: beginning work-in-process 1, 196 837 2,033 Deduct: ending work-in-process (1,207) (815) (2,022) Cost of goods manufactured $ 946,326 $ 724,467 $ 448,187 $ 2, 118,980 Budgeted cost of product manufactured For the year ended December 31, 20X7 The-Bar Alamonde Salt-Lick Total Direct ingredients used $ 330,271 $ 231,514 $ 128,694 $ 690,479 Direct labour 147,744 101,736 57,996 307,476 Manufacturing overhead 518,685 357,165 203,607 1,079,457 Total manufacturing costs $ 996,700 $ 690,415 $ 390,297 $ 2,077,412 Add: beginning work-in-process 2,991 2,094 5,085 Deduct: ending work-in-process (2,885) (1,949) (4,834) Cost of good manufactured $ 996,806 $ 690,560 $ 390,297 $ 2,077,663Exhibit 2 Volume Sales Cost of goods sold Gross margin Selling and administrative expenses Operating income Gross margin % Volumes Sales Cost of goods sold Gross margin Selling and administrative expenses Operating income Gross margin % Actual operating income statement For the year ended December 31 , 20X? The-Bar 776,000 Per bar $1,164,000 $1.50 945,595 $ 218,405 18.8% Alamonde 528,000 $ 897,600 724,672 $ 172,928 19.3% Per bar $1.70 Salt-Lick 302,500 $ 605,000 448,1 87 $156,813 25.9% Budgeted operating income statement For the year ended December 31 , 20X? The-Bar 774,400 $ 1 , 1 61 .600 996,034 $ 165,566 14.3% Per bar $1.50 Alamonde 529,1 00 $ 952,380 690,756 $ 261,624 27.5% Per bar $1.80 Salt-Lick 301 ,400 $ 602,800 M $212,503 35.2% Per bar $2.00 Per bar $2.00 Total 1,606,500 $2,666,600 2 118 454 $ 548,146 541 681 w 20.6% Total 1,604,900 $2,716,780 2,077,087 $ 639,693 542,554 97,139 23.5% Exhibit 4 Other budgeted and actual schedules are provided below to help with the analysis. Actual quantity and cost of direct ingredients For the year ended December 31 , 20x7 Ingredient Price The-Bar Alamonde Salt-Lick Total Quantity Cost Quantity Cost Quantity Cost Quantity Cost Chocolate liquor $5.55/kg 27,160 $150,738 18,480 $102,564 8,894 $49,359 54,534 $302,661 Cocoa butter $6.10/kg 10,321 62,957 7,022 42,837 2,753 16,792 20,096 122,586 Cocoa powder $1 .18/kg 5,432 6,410 2,218 2,617 2,118 2,499 9,768 11,525 Cane sugar $0.70/kg 10,321 7,225 7,022 4,916 6,247 4,372 23,590 16,513 Emulsifier $0.80/kg 462 369 739 590 212 169 1,413 1,129 Vanilla $70l|itre 625 43,728 370 25,872 424 29,645 1,418 99,245 Almonds $1 Olkg 1,109 11,088 1,109 11,088 Himalayan salt $5.50/kg 529 2,912 529 2,912 Cost of ingredients $271,427 $190,484 $1 05,748 $567,659 Wrappers $0.08/bar 776,000 62,080 528,000 42,240 302,500 24,200 1,606,500 128,520 Total cost $333,507 $232,724 $129,948 $696,179 Budgeted quantity and cost of direct ingredients For the year ended December 31, 20x7 Ingredient Price The-Bar Alamonde Salt-Lick Total Quantity Cost Quantity Cost Quantity Cost Quantity Cost Chocolate liquor $5.50/kg 27,104 $149,072 18,519 $101,852 8,861 $48,736 54,484 $299,660 Cocoa butter $6.00/kg 10,300 61,797 7,037 42,222 2,743 16,456 20,079 120,476 Cocoa powder $1 .15/kg 5,421 6,234 2,222 2,556 2,110 2,426 9,753 11,216 Cane sugar $0.70/kg 10,300 7,210 7,037 4,926 6,224 4,357 23,560 16,492 Emulsifier $0.80/kg 461 369 741 593 211 169 1,412 1,130 Vanilla $70/Iitre 623 43,637 370 25,926 422 29,537 1,416 99,101 Almonds $10/kg 1,111 11,111 1,111 11,111 Himalayan salt $5.50/kg 527 2,901 527 2,901 Cost of ingredients $268,319 $189,186 $104,582 $562,087 Wrappers $0.08/bar 774,400 61,952 529,100 42,328 301,400 24,112 1,604,900 128,392 Total cost $330,271 $231,514 $128,694 $690,479 Actual direct labour For the year ended December 31 , 20X7 The-Bar Alamonde Salt-Lick Total Direct labour hours 4,105 3,744 2,125 9,974 Cost per direct labour hour $ 33.10 $ 33.10 $ 33.10 $ 33.10 Total actual direct labour costs $ 135,876 $ 123,926 $ 70,338 $ 330,140 Budgeted direct labour For the year ended December 31 , 20X7 The-Bar Alamonde Direct labour hours 4,560 3,140 Cost per labour hour $ 32.40 $ 32.40 Total budgeted direct labour cost $147,744 $101,736 Actual manufacturing overhead For the year ended December 31, 20X7 Variable Plant utilities $ 103,584 Plant maintenance 89,566 Fixed Quality control $ 37,500 Computer and supplies 188,000 Plant and equipment amortization 150,000 Research and development 135,000 Indirect plant salary and wages 193,000 Plant lease 196,000 Total manufacturing overhead Budgeted manufacturing overhead For the year ended December 31 , 20X7 Variable Plant utilities $ 101,876 Plant maintenance 91,081 Fixed Quality control $ 39,000 Computer and supplies 189,000 Plant and equipment amortization 150,000 Research and development 120,000 Indirect plant salary and wages 192,500 Plant lease 196,000 Total manufacturing overhead Salt-Lick Total 1 ,790 9,490 5 32.40 32.40 $ 57,996 $ 307,476 $ 193,150 899,500 $ 1 ,092,650 $ 192,957 886,500 $ 1 ,079,457 Predetermined overhead rate = $1 ,079,457/9,490 direct labour hours = $113.74678 per direct labour hour