Paragraph CASE STUDY: GRIMBLE CABINET COMPANY The Grimble Cabinet Company is a single product company manufacturing superior whitewood cabinets. It is a division of Grimble Group ple which began as a timber company and is now highly diversified. Each division must produce a monthly performance statement and the General Manager of Grimble Cabinet Company discusses the results with the Managing Director of the Grimble Group, along with certain other divisional General Managers. The division is assessed on the basis of (a) the monthly profit and variance report; (6) the annualised Return on Capital Employed (ROCE). Usually, the accountant of Grimble Cabinet Company prepares this statement but at the time of the May report he, and most of his staff, have fallen ill with a 'flu virus. The General Manager has decided to prepare the monthly performance statement himself Requirement: Stage 1 From the information given below, prepare the performance report for May. Use the pro-forma report supplied Standards Per cabinet Direct Materials 2.4 sq. metre at 5.00 per sq metre Direct Labour Hours Direct Labour Rate 2.50 per hour Total Overhead Absorption Rate 4.00 per standard labour hours Selling Price 40- Per month Production & Sales 10,000 units Fixed Overheads 40,000 (included in absorption rate above) Actual Results Sales 9,000 units sales value 378,000 Production 9,000 units Fixed Overheads incurred 42,000 Variable Overheads incurred 37,000+ Direct Materials used 22,500 sq metres costing 123,750 Direct Labour Costs 20,000 hours costing 46,000 For the ROCE calculations the opening value of capital employed is 18m. Below is an abbreviated transcript of part of the meeting of General Managers in the "wood products" group of Grimble Group. There are three General Managers and the Managing Director Francis Grimble is Group Managing Director Howard Iles is General Manager of Timber Division Jane Kent is General Manager of Grimble Cabinets Len Monkton is General Manager of Wood Stores. Within the group there are certain regular transactions. Grimble Cabinets buys timber from the Timber Division. This is an instruction from Grimble Group and the transaction should be at market price. Wood Stores is a small group of stores selling wood and wood products. Wood Stores buys its timber from the Timber Division under the same conditions as Grimble Cabinets and it also buys the Whitewood Cabinets from Grimble Cabinets under normal trade terms. All the divisions have more sales to third parties than they do within the group. Paragraph CASE STUDY: GRIMBLE CABINET COMPANY The Grimble Cabinet Company is a single product company manufacturing superior whitewood cabinets. It is a division of Grimble Group ple which began as a timber company and is now highly diversified. Each division must produce a monthly performance statement and the General Manager of Grimble Cabinet Company discusses the results with the Managing Director of the Grimble Group, along with certain other divisional General Managers. The division is assessed on the basis of (a) the monthly profit and variance report; (6) the annualised Return on Capital Employed (ROCE). Usually, the accountant of Grimble Cabinet Company prepares this statement but at the time of the May report he, and most of his staff, have fallen ill with a 'flu virus. The General Manager has decided to prepare the monthly performance statement himself Requirement: Stage 1 From the information given below, prepare the performance report for May. Use the pro-forma report supplied Standards Per cabinet Direct Materials 2.4 sq. metre at 5.00 per sq metre Direct Labour Hours Direct Labour Rate 2.50 per hour Total Overhead Absorption Rate 4.00 per standard labour hours Selling Price 40- Per month Production & Sales 10,000 units Fixed Overheads 40,000 (included in absorption rate above) Actual Results Sales 9,000 units sales value 378,000 Production 9,000 units Fixed Overheads incurred 42,000 Variable Overheads incurred 37,000+ Direct Materials used 22,500 sq metres costing 123,750 Direct Labour Costs 20,000 hours costing 46,000 For the ROCE calculations the opening value of capital employed is 18m. Below is an abbreviated transcript of part of the meeting of General Managers in the "wood products" group of Grimble Group. There are three General Managers and the Managing Director Francis Grimble is Group Managing Director Howard Iles is General Manager of Timber Division Jane Kent is General Manager of Grimble Cabinets Len Monkton is General Manager of Wood Stores. Within the group there are certain regular transactions. Grimble Cabinets buys timber from the Timber Division. This is an instruction from Grimble Group and the transaction should be at market price. Wood Stores is a small group of stores selling wood and wood products. Wood Stores buys its timber from the Timber Division under the same conditions as Grimble Cabinets and it also buys the Whitewood Cabinets from Grimble Cabinets under normal trade terms. All the divisions have more sales to third parties than they do within the group