Question 3: The ABC Company acknowledges that by determining the standards against actually results is a way to determine potential problems. By using a standard cost system, company ABC purchases and uses 20,000 pounds of direct materials for their production in July. The actual cost of the raw material came to a total of $66,000. The materials quantity variance was $1,400 and the standard quantity of materials allowed for July production was 19,300 pounds. Determine the materials price variance for July. Furthermore, determine what the company may do in the next month to avoid using more than the allowed material weigth in the next month. Furthermore, explain why some companies only require that unfavorable variance be explained while many companies require both favorable and unfavorable variance be explained. (Marking Scheme: 4 marks of computation; 6 marks for analysis = 10 marks)

Question 4: Macaroon Corporation produces product ABC and has provided the data from its activity-based costing system for assembly, processing orders and inspection of its product. They have estimated a total cost of at a total of 23,000 machine hours, it costed the company a total of $383,180 for the assembly of product ABC. The company produced a total of 1,100 orders at a total of $50,798 and 1,620 hours of inspection at a total of $106,100.

In the year 2018, the company produced and sold a total of 210 unit at a selling price per unit of $124.60. The annual machine hour or production was a total of 320 and inspection hours 10. The annual orders came out to be a total of 80 orders where the direct material cost per unit is $22.08 and Direct labor cost per unit $45.77.

Activity Pool Cost	Total Cost	Total Activity
Assembly	383180	23000
Processing Order	50798	1100
Inspection	106100	1620

Selling Price Per Unit	124.6
Direct Material Cost per unit	22.08
Direct Labor Cost Per unit	45.77
Annual Units Production & Sales	210
Annual Machine Hours	320
Annual Orders	80
Annual Inspection Hours	10

1. Determine the suitable production margin for product ABC based on total assembly (2 marks), processing orders (2 marks) and inspection cost pool (2 marks)
2. Compute the appropriate activity cost rate for product . (3 Marks)
3. Compute the average cost of product AB (3 Marks)

Question 5: Iron Manufactures decorative iron railings makes several assumptions when it comes to preparing for next years operations. The management has developed a number of estimates which include sales price, fixed cost, and variable cost per unit. Running theit analysis involves using severation equations to figure out the best sales voloum option for them. The assumptions the company made are:

	Total	Per Unit
Sales (20,000 units)	$ 1,000,000	$ 50
Direct Materials	$ 200,000	$ 10
Direct Labor (variable)	$ 50,000	$ 2.50
Manufacturing Overhead:
Variable	$ 70,000	$ 3.50
Fixed	$ 80,000	$ 4
Selling & Administrative:
Variable	$ 100,000	$ 5
Fixed	$ 30,000	$ 1.50

For the business to be profitable, the contribution margine must exceed total fixed costs. Determine whetere the contribution margin of the company exceeds its total fixt cost (2 Marks). If yes, determine what is the appropriate break-even point (in both dollars and units) for the company. (2 Marks)

Evaluate what will the revenue earned by the company be after they pay all their fixed and variable costs associated with the production (2 Marks). If the company is targeting a net operating income of $660,500, what will the best degree of net operating leverage be? (2 Marks).