'Waltham Motors Division\r'

'Question 1: utilize compute info, how some(prenominal) motors would mystify to be exchange for Waltham Motors Division to breakeven? In secernate to head the breakeven exhibit, we use the following comparison and cipher data: Breakeven Sales* social unit of mea veritablement determine-Unit Variable Cost= Fixed be Breakeven=Fixed CostsUnitary bell-Unitary Variable Cost Breakeven point=260,00086 cd0/18000-512800/18000=13,226 units Q2. Using compute data, what was the count anticipate embody per unit if all manufacturing and transfer overhead (both unsettled and fixed) was allocated to planned end product? What was the authentic per unit cost of turn prohibited and shipping?The consequences for the total expected cost/unit with budget data is: evaluate Cost/Unit= Manufacturing Overhead(variable and not variable)+ conveyance Overhead# of Units= =484,000+148,000+28,80018,000=$36. 71/unit The results for the total expected cost/unit with existing data is: 404,000 +149,200+28,00014,000=$41,51/unit Q3. Comment on the performance report and the plant controller’s analytic thinking of results. How, if at all, would you imply the performance report be changed out front sending it on to the division manager and Marco Corporation headquarters?The nibant is do a big mistake by comparing absolute numbers from Budgeted cost and revenues with Actual cost, since the unfeigned number of units sold is less than the Budgeted amount. Therefore, a more expand analysis moldiness be done, and calculate the be per unit, as Table 1 shows: Table 1 From this in the altogether data on Table 1, we tush base the following observations about the accountant’s comments: * The totally cost that was underestimated (Favourable = F) is the Indirect compass, so the first comment about being under budget on any single cost except for superintendence is wrong. The operating income has falloffd, which is expected given the decrease in number of motors sold (4. 000), passive based on the report we still advisenot tell whether that is the only reason. This also leads to a difference between the actual cost ($49) and the budgeted expenditure ($48). * The current static budget implys to be changed into a waxy budget so the budgeted data can be recorded taking into account the actual units produced, that is, 14. 000 units. Q4. Prepare your own analysis of the Waltham Division’s operations in May.Explain in as much full point as possible why income differed from what you would have expected. As suggested in Question3, a new waxy budget is calculated, so straight off it is possible to calculate the segmentations between the Flexible budget and the Actual Results and Static budget we had before. The data is show below in Table 2: Table 2 From this table we can see how the critical Static budget variableness = 98 cd seen in the accountant’s Performance explanation is now divided into the Flexible budget division = 20. 356$ (2) and the Sales volume variableness = 78. 44$ (3): Flexible budget variance: is the difference between the actual result and the corresponding flexible-budget amount. This variance is subdivided into: * Sales variance $14. 000 Favourable. This is due(p)(p) to a higher footing charged for the motors (49$ instead of the 48$ budgeted), peradventure because of changes in prices of the competitors as well. * Variable costs variance is invidious by $27. 556, the divergent components of this variance are: * Direct hooey variance: Unfavourable by of $1. 00, we need to find out whether this is due to worth and/or Efficiency variance. The accountant indicates that the actual price for direct materials is $5. 7/unit (5% less than budgeted), alone the budgeted price was $6/unit. On the other hand, the standard measure is 14. 000 units while the actual quantity is 85. four hundred/5. 7=14982. 45 units, therefore: * Price variance = $89. 894,75 †$85. 400 = $4 494. 76 Favourable. This reflects the corporation saved money with the decreased prices of unexampled materials * Efficiency Variance = $84. 00-$89. 894,76 = $5894,76 Unfavourable. Since this amount is big than the Favourable amount of the Price variance, we can conclude that the overall reproachful 1. 400$ Direct material balance is due to Efficiency Variance. There are many reasons that index cause this in dexterity coming from the action manager or the purchase manager, such as expectant quality of the untoughened materials bought (which were cheaper after all), or waste of these during the turnout process. * Direct Labour variance: Unfavourable by $22. 000.Again, we need to find out whether this is Price and/or cleverness driven. We have intercourse that according to the accountant information, the actual price is $16,4/unit while the standard price is $16/unit. On the other hand, the Standard cadence is 14. 000 units while the actual Quantity is 246. 000/16,4=15. 000 units. Therefore: * Price Variance = 240. 000-246. 000 = $6000 Unfavourable. This reflects the ontogeny in medical benefits noted by the accountant. * Efficiency Variance = 224. 000-240. 000 = $16. 000 Unfavourable.The accountant does not mention anything that can tell for sure the reasons for this lack of efficiency, so we can only guess some reasons such as a change in the dig out force to an unskilled one. * Idle era and Cleanup Time: Unfavourable by $3. 000 + $1. 600 respectively, might be due to antithetical reasons such as low efficiency in the cleanup process, or adult shape of the machines used to manufacture the motors that dark into a lot of idle judgment of conviction compared to the one budgeted. The idle time must be monitored since it can lead to unless decrease of Labour efficiency. Indirect Labour and Miscellaneous supplies: Favourable by $400 + $40 respectively, might be due to many reasons but the amounts are also small to make up for the unfavourable amounts found in the rest of the variable costs. It might be a coincidence, but there was a favourable Price efficiency for Direct Material, so by chance the Purchasing department is doing a upright job. * Fixed costs variance * inadvertence unfavourable by $1. 200 might be due to low efficiency of the supervising staff as noted in the accountant comments. * Shipping costs variance: Unfavourable by $5. 00 in all probability because of additional shipping due to bad quality of products that have to be returned and shipped again, or just because of bad efficiency in the shipment process by not using full capacity of transportation. Sales-volume variance: it is the difference between the flexible-budget amounts and the static budget and it arises solely because of the difference between the actual quantity of motors produced and the amount budgeted (expected) to be produced by the company. In this case there is a variance of $78. 044, and we can assume it is because of the chance on contract that was lost.\r\n'