问答题
Sticky Wicket (SW) manufactures cricket bats using high quality wood and skilled labour using mainly traditional manual techniques. The manufacturing department is a cost centre within the business and operates a standard costing system based on marginal costs.<br>At the beginning of April 2010 the production director attempted to reduce the cost of the bats by sourcing wood from a new supplier and de-skilling the process a little by using lower grade staff on parts of the production process. The standards were not adjusted to refl ect these changes.<br>The variance report for April 2010 is shown below (extract).<br>The production director pointed out in his April 2010 board report that the new grade of labour required signifi cant training in April and this meant that productive time was lower than usual. He accepted that the workers were a little slow at the moment but expected that an improvement would be seen in May 2010. He also mentioned that the new wood being used was proving diffi cult to cut cleanly resulting in increased waste levels.<br>Sales for April 2010 were down 10% on budget and returns of faulty bats were up 20% on the previous month. The sales director resigned after the board meeting stating that SW had always produced quality products but the new strategy was bound to upset customers and damage the brand of the business.<br>Required<br>(a) Assess the performance of the production director using all the information above taking into account both the decision to use a new supplier and the decision to de-skill the process. (7 marks)<br>In May 2010 the budgeted sales were 19,000 bats and the standard cost card is as follows:<br>In May 2010 the following results were achieved:<br>40,000kg of wood were bought at a cost of $196,000, this produced 19,200 cricket bats. No inventory of raw materials is held. The labour was paid for 62,000 hours and the total cost was $694,000. Labour worked for 61,500 hours.<br>The sales price was reduced to protect the sales levels. However, only 18,000 cricket bats were sold at an average price of $65.<br>Required:<br>(b) Calculate the materials, labour and sales variances for May 2010 in as much detail as the information allows. You are not required to comment on the performance of the business. (13 marks)
问答题
Glove Co makes high quality, hand-made gloves which it sells for an average of $180 per pair. The standard cost of labour for each pair is $42 and the standard labour time for each pair is three hours. In the last quarter, Glove Co had budgeted production of 12,000 pairs, although actual production was 12,600 pairs in order to meet demand.<br>37,000 hours were used to complete the work and there was no idle time. The total labour cost for the quarter was $531,930.<br>At the beginning of the last quarter, the design of the gloves was changed slightly. The new design required workers to sew the company’s logo on to the back of every glove made and the estimated time to do this was 15 minutes for each pair. However, no-one told the accountant responsible for updating standard costs that the standard time per pair of gloves needed to be changed. Similarly, although all workers were given a 2% pay rise at the beginning of the last quarter, the accountant was not told about this either. Consequently, the standard was not updated to reflect these changes.<br>When overtime is required, workers are paid 25% more than their usual hourly rate.<br>Required:<br>(a) Calculate the total labour rate and total labour efficiency variances for the last quarter. (2 marks)<br>(b) Analyse the above total variances into component parts for planning and operational variances in as much detail as the information allows. (6 marks)<br>(c) Assess the performance of the production manager for the last quarter. (7 marks)
问答题
Shoe Co, a shoe manufacturer, has developed a new product called the ‘Smart Shoe’ for children, which has a built-in tracking device. The shoes are expected to have a life cycle of two years, at which point Shoe Co hopes to introduce a new type of Smart Shoe with even more advanced technology. Shoe Co plans to use life cycle costing to work out the total production cost of the Smart Shoe and the total estimated profit for the two-year period.<br>Shoe Co has spent $5·6m developing the Smart Shoe. The time spent on this development meant that the company missed out on the opportunity of earning an estimated $800,000 contribution from the sale of another product.<br>The company has applied for and been granted a ten-year patent for the technology, although it must be renewed each year at a cost of $200,000. The costs of the patent application were $500,000, which included $20,000 for the salary costs of Shoe Co’s lawyer, who is a permanent employee of the company and was responsible for preparing the application.<br>The following information is also available for the next two years:<br>Shoe Co is still negotiating with marketing companies with regard to its advertising campaign, so is uncertain as to what the total marketing costs will be each year. However, the following information is available as regards the probabilities of the range of costs which are likely to be incurred:<br>Required:<br>Applying the principles of life cycle costing, calculate the total expected profit for Shoe Co for the two-year period.<br>(10 marks)
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