Waltham Motors Division

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Manufactured Electric Motors of single design Motors sold to Household appliance Manufacturers Originally a family business, acquired by Marco Corporation in late 2003

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A major contract was lost by the company No major changes were made to operating procedures and systems after the acquisition New personnel from Marco were deployed to observe how well the existing procedures functioned







2004 Budget – Based on estimated Sales and Production cost Due to no seasonal fluctuations, monthly budget is 1/12th of Annual budget. No adjustments made to May budget when the contract was lost in April





No beginning and ending inventories in Work in progress or Finished goods. Per unit standard cost used in budgeting for 2004 were  

Direct material Direct labor

$6 $16

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Two hours per unit as standard labor time Actual material prices – 5% less than expected Direct labor costs increased to $8.20 due to increased medical benefits granted last January

Using budget data, how many motors would have to be sold for Waltham Motors Division to break even? The number of motors to be sold for break even is calculated as shown below.

Using budget data, what was the total expected cost per unit if all manufacturing & shipping overhead (both variable & fixed) was allocated to planned production? What was the actual per unit cost of production and shipping?

Total Expected cost per Unit = $42.93 Total actual cost per Unit=$49.51 Per unit actual shipping cost= $2

Comment on the performance report and the plant accountant’s analysis of results. How, if at all, would you suggest the performance report be changed before sending it on to the division manager and Marco corporation headquarters? The plant accountant is not depicting true picture The sales revenues & costs (actual/budgeted) compared at different output level i.e. 18000 for budget & 14000 for actual. The plant accountant’s claim that every cost...
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