II. HB Corporation in Delaware, U.S., makes and sells a single product. The company operates a standard costing system and a just-in-time purchasing and production system. No inventory of raw materials or finished goods is held. Details of the budget and actual data for the previous period are given below: Budget data Standard production costs per unit (currency in U.S. dollar, $): 8kg at the rate of $10.80 per kg 1.25 hours at the rate of $18.00 per hour Variable overheads 1.25 hours at the rate of $6.00 per direct labor hour Direct material 86.40 Direct labor 22.50 7.50 Standard selling price: $180 per unit Budgeted fixed production overheads: $170 000 Budgeted production and sales: 10 000 units Actual data Direct material: 74 000kg at the rate of$11.20 per kg Direct labor: 10,800 hours at the rate of$19.00 per hour Variable overheads: $70,000 Actual selling price: $184 per unit Actual fixed production overheads: $168 000 Actual production and sales: 9000 units Requirements 1. Prepare a statement using marginal costing principles that reconciles the budgeted profit and the actual profit. Your statement should show the variances in as much detail as possible.

II. HB Corporation in Delaware, U.S., makes and sells a single product. The company operates a standard costing system and a just-in-time purchasing and production system. No inventory of raw materials or finished goods is held. Details of the budget and actual data for the previous period are given below: Budget data Standard production costs per unit (currency in U.S. dollar, $): 8kg at the rate of $10.80 per kg 1.25 hours at the rate of $18.00 per hour Variable overheads 1.25 hours at the rate of $6.00 per direct labor hour Direct material 86.40 Direct labor 22.50 7.50 Standard selling price: $180 per unit Budgeted fixed production overheads: $170 000 Budgeted production and sales: 10 000 units Actual data Direct material: 74 000kg at the rate of$11.20 per kg Direct labor: 10,800 hours at the rate of$19.00 per hour Variable overheads: $70,000 Actual selling price: $184 per unit Actual fixed production overheads: $168 000 Actual production and sales: 9000 units Requirements 1. Prepare a statement using marginal costing principles that reconciles the budgeted profit and the actual profit. Your statement should show the variances in as much detail as possible.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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DVR Limited has two profit centres, Division Red and Division Blue. Division Red supplies Division Blue with a part finished product. Division Blue finishes the product and sells the finished units in the market place at £70/unit. Currently Division Red is working at full capacity and there is no external market for the part finished product. Budgeted data for the year is: Division Red Division Blue Number of units transferred/sold 25,000 25,000 Material cost per unit £12.00 £20.00 Other variable costs per unit £5.00 £10.00 Annual fixed costs £35,000 £40,000 Currently Division Red transfer the part finished item to Division Blue at marginal cost plus 20%. The transfer cost is not included in the Division Blue figures above. Required: Calculate the budgeted annual profit for Division Red, Division Blue and DVR Limited and comment on whether the current arrangement would be deemed fair to both divisions.
6. Bloomsbury plc sells one product for which data for a budgeted period are given below: Selling price per unit Variable cost per unit Fixed cost per unit 80 48 16 Fixed costs are based on a budgeted level of activity of 5,000 units. Calculate the total costs of production of 5,000 units: A. £80,000 B. £240,000 C. £320,000 D. £400,000.
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Gold Star Rice, Limited, of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice-White, Fragrant, and Loonzain. Budgeted sales by product and in total for the coming month are shown below: Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income White 20% $ 150,000 108,000 $ 42,000 Fragrant 52% 100% $ 390,000 72% 28% $ 312,000 78,000 Required 1 Required 2 Product Loonzain 28% Complete this question by entering your answers in the tabs below. 100% $ 210,000 20% 84,000 80% $ 126,000 Required: 1. Prepare a contribution format income statement for the month based on the actual sales data. 2. Compute the break-even point in dollar sales for the month based on your actual data. 100% 40% 60% Tota 100% Dollar sales to break-even = Fixed expenses / CM ratio = $449,280 / 0.64 = $702,000 As shown by these data, net operating income is budgeted at $30,720 for the month and the estimated break-even sales is $702,000.…
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Kyonggi Machine Corporation in Suwon reports the following operating results for the month of June in 2020. KYONGGI MACHINE CORPORATION CVP Income Statement For the Month Ended June 30, 2020 (Currency Unit: Korean Won, ₩) Total Per Unit Sales (5,000 units) ₩300,000,000 ₩60,000 Variable costs 180,000,000 36,000 Contribution margin 120,000,000 ₩24,000 Fixed expenses 100,000,000 Net income ₩ 20,000,000 To increase net income, management is considering reducing the selling price by 10%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 25%. (Instructions) Compute the break-even point in units and…
Wongtien Electronics Corp. in Hong Kong, SAR, China, manufactures tablets, laptops and desktop PCs. Wongtien currently operates a standard absorption costing system. Budgeted information for next year is given below (currency in one thousand Hong Kong Dollars, HK$000): Products Tablets Laptops Desktop PCs Total Sales revenue 3,640 12,480 9,880 26,000 Direct material 800 2,800 2,200 5,800 Direct labor 300 1,200 800 2,300 Fixed production overheads 1,456 4,992 3,952 10,400 Gross profit 1,084 3,488 2,928 7,500 Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an activity-based…
Wongtien Electronics Corp. in Hong Kong, SAR, China, manufactures tablets, laptops and desktop PCs. Wongtien currently operates a standard absorption costing system. Budgeted information for next year is given below (currency in one thousand Hong Kong Dollars, HK$000): Products Tablets Laptops Desktop PCs Total Sales revenue 3,640 12,480 9,880 26,000 Direct material 800 2,800 2,200 5,800 Direct labor 300 1,200 800 2,300 Fixed production- overheads 1,456 4,992 3,952 10,400 Gross profit 1,084 3,488 2,928 7,500 Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an…
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