The top page is the last part of the test
A) What was the tequila total price variance (include "F"avorable" or "U"nfavorable") for Saturday? (for full or partial credit, show some work and/or calculations and clearly identify answers) B) What was the tequila total quantity variance (include "F"avorable or "U"nfavorable) for Saturday? (for full or partial credit, show some work and/or calculations and clearly identify answers) C) (4 points total, evaluated for appropriateness and completeness) Based on your answers to A) and B), what could have caused each variance? (there were no errors in setting standards) Be specific on which answer is for which variance. And based on each variance cause, what managerial steps should you (the owner) take? (Note: Available space below, but watch your right-side margins, make sure answers don't ge Test 2 Part 2 contains 3 multi-part questions, 30 points total A couple of formulas/hints: In the applicable module, we used the columnar method to determine Price Variance and Quantity Variance, starting with AQAP Internal rate of return factor: initial investment divided by net annual incremental cash flows Question 1 (8 points) You ovn a small company that already produced 600 "Quick Guide to Business Terms". booklets. Production of these 600 booklets resulted in a total cost of $3,000. You plan to sell them for $14 each. You fully expect to be able to sell all of the booklets that you produced. at the regular selling price of $14 each. A community college has offered to buy 250 of these booklets and pay you (see below for the amount paid to you for each, instead of $14 each) if you process further by adding a special cover with the college logo on it. Your additional cost of adding the special college logo cover to 250 booklets would be $1,700. This is a one-time offer only and would not grow into a future, larger repeat business, and there are no other relevant issues. Thus, your decision is whether to accept the community college offer and process further...or not! Price that the community college has offered to pay for each booklet (use only the price assigned to you!): According to Managerial Accounting: A) (2 pts) Is the $3,000 cost to print the 600 booklets relevant to THISdecision?(YESorNO)and explain why or why not. B) (6 pts) Should you accept the community college offer and process further? (YES or NO?) SHOW CALCULATIONS and a clearly identified differential in net income that would result from accepting the offer (do NOT make reviewer, i.e., instructor) hunt for itl). (hint: consider using an easy-to-follow differential analysis approach) Question 2 (10 points) You own MargaritaVilla, a local establishment that serves beverages. You have been concerned about your tequila costs and have the following information: Tequila is used exclusively in margaritas (not sold separately or as part of any other drink). Based on the margarita recipe standards, each and every case of tequila is expected to yield (be used in the production of) a total of 144 margaritas. (12 bottles per case, 12 margaritas per bottle) The standard price (what we expect to pay our supplier) of tequila is $240 per case. The following actual results were recorded for last Saturday (only one night of business!): MargaritaVilla sold 360 margaritas. Exactly 3 full cases of tequila were used at a total cost (total of all 3 cases) of (see below). Total actual cost of tequila used (Use only the amount shown for YOU): Daseu un ule abuve, answer quesuons A. D) and C) veluw: (3 points each for A ) and B ), 4 points for C )) A) What was the tequila total price variance (include "F"avorable" or "U"nfavorable") for Saturday? (for full or partial credit, show some work and/or calculations and clearly identify answers) B) What was the tequila total quantity variance (include "F"avorable or "U"nfavorable) for Saturday? (for full or partial credit, show some work and/or calculations and clearly identify answers) C) (4 points total, evaluated for appropriateness and completeness) Based on your answers to A) and B), what could have caused each variance? (there were no errors in setting standards) Be specific on which answer is for which variance. And based on each variance cause, what managerial steps should you (the owner) take? (Note: Available space below, but watch your right-side margins, make sure answers don't ge Test 2 Part 2 contains 3 multi-part questions, 30 points total A couple of formulas/hints: In the applicable module, we used the columnar method to determine Price Variance and Quantity Variance, starting with AQAP Internal rate of return factor: initial investment divided by net annual incremental cash flows Question 1 (8 points) You ovn a small company that already produced 600 "Quick Guide to Business Terms". booklets. Production of these 600 booklets resulted in a total cost of $3,000. You plan to sell them for $14 each. You fully expect to be able to sell all of the booklets that you produced. at the regular selling price of $14 each. A community college has offered to buy 250 of these booklets and pay you (see below for the amount paid to you for each, instead of $14 each) if you process further by adding a special cover with the college logo on it. Your additional cost of adding the special college logo cover to 250 booklets would be $1,700. This is a one-time offer only and would not grow into a future, larger repeat business, and there are no other relevant issues. Thus, your decision is whether to accept the community college offer and process further...or not! Price that the community college has offered to pay for each booklet (use only the price assigned to you!): According to Managerial Accounting: A) (2 pts) Is the $3,000 cost to print the 600 booklets relevant to THISdecision?(YESorNO)and explain why or why not. B) (6 pts) Should you accept the community college offer and process further? (YES or NO?) SHOW CALCULATIONS and a clearly identified differential in net income that would result from accepting the offer (do NOT make reviewer, i.e., instructor) hunt for itl). (hint: consider using an easy-to-follow differential analysis approach) Question 2 (10 points) You own MargaritaVilla, a local establishment that serves beverages. You have been concerned about your tequila costs and have the following information: Tequila is used exclusively in margaritas (not sold separately or as part of any other drink). Based on the margarita recipe standards, each and every case of tequila is expected to yield (be used in the production of) a total of 144 margaritas. (12 bottles per case, 12 margaritas per bottle) The standard price (what we expect to pay our supplier) of tequila is $240 per case. The following actual results were recorded for last Saturday (only one night of business!): MargaritaVilla sold 360 margaritas. Exactly 3 full cases of tequila were used at a total cost (total of all 3 cases) of (see below). Total actual cost of tequila used (Use only the amount shown for YOU): Daseu un ule abuve, answer quesuons A. D) and C) veluw: (3 points each for A ) and B ), 4 points for C ))
