Do Pure Monopolies Exist?

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Week 4 Exercise
15-1.
Items to Classify| Standard| Actual| Type of Variance|
Labor cost| $10.00 per hr| $9.60 per hour| favorable|
Labor usage| 61,000 hrs| 61,800 hrs| unfavorable|
Fixed cost spending| $400,000| $390,000| favorable|
Fixed cost per unit| $3.20 per unit| $3.16 per unit| favorable| Sales volume| 40,000 units| 42,000| unfavorable|
Sales price| $3.60 per unit| $3.63 per unit| unfavorable| Materials cost| $2.90 per pound| $3.00 per pound| unfavorable| Materials usage| 91,000 pounds| 90,000 pounds| favorable|

15-2.
Item| Budget| Actual| Variance| F or U|
Sales Price| $650| $525| $125| F|
Sales revenue| $580,000| $600,000| $20,000| U|
Cost of goods sold| $385,000| $360,000| $25,000| F|
Material purchase @5,000 lbs| $275,000| $280,000| $5,000| U| Materials usage| $180,000| $178,000| $2,000| F|
Production volume| 950 units| 900 units| 50 units| F|
Wages @4,00 hrs| $60,000| $58,700| $1300| F|
Labor usage @$16 per hr| $96,000| $97,000| $1000| U|
Research & Development expenses| $22,000| $25,000| $3000| U| Selling & admin. expenses| $49,000| $40,000| $9,000| F|

15-4.
| Static Budget| Flexible Budget| Volume Variance| F or U| Number of units| 2,000| 2,200| 200| F|
Sales Revenue| $16,000| $17,600| $1600| F|
Variable manufacturing cost| $8,000| $8,800| $800| U|
Contributing Margin| $8,000| $8,800| $800| F|
Fixed Cost| | | | |
Manufacturing Cost| $3,000| $3,000| 0| |
Selling and admin| $1,000| $1,000| 0| |
Net income| $4,000| $4,800| $800| F|

(c) Marketing managers are usually responsible the volume variance which is usually the planned volume of sales and price. The production managers are concerned with the material cost variance. Management is usually focused on the sales price variance and the materials variance. (d) Fixed manufacturing cost =...
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