$20.00 Managerial Accounting
Please refer to the attached file for the entire problem.
Kiwi Company produces automobiles. It had budgeted sales and production of 10,000 cars for 2010 at a selling price of $5000 each. The company had budgeted the following costs for 2010:
Standard Variable Manufacturing Costs per unit $4000
Fixed Manufacturing Overhead for year $3,000,000
Selling and Admin Costs: Variable (per unit) $500 Fixed (total for year) $1,000,000
The company actually sold 11,000 cars for $4800 each. Suppose that at the end of the year the financial results for the period are:
Variable Manufacturing Costs $46,000,000
Variable Selling and Admin Costs $3,500,000
Fixed Manufacturing Costs $2,000,000
Fixed Selling and Admin Costs $1,200,000
What were budgeted profits for the year? What were actual profits for the year? What was the overall variance in profits for the year? Did the company overall perform better or worse than expected?
Compute total master budgets and actuals for: (a) revenues
(b) variable manufacturing costs (c) variable selling and admin costs (d) fixed manufacturing costs (e) fixed selling and admin costs Which line items were responsible for the overall profit variance?
Compute flexible budgets for: (a) revenues
(b) variable manufacturing costs (c) variable selling and admin costs (d) fixed manufacturing costs (e) fixed selling and admin costs
Compute selling price and volume variances for revenues.
Compute volume variances and combined price/efficiency variances for variable costs.
What is the volume variance for fixed manufacturing costs?
Kiwi has two responsibility centers: production and sales. Production is responsible for
efficiently purchasing for and producing the necessary amount of production. Sales is responsible for pricing and therefore the amount sold, as well as for controlling selling and administrative costs. Which combination of variances would you use to evaluate the two departments? Which variances would you view as uncontrollable? Each year a cash bonus of $1000 per person is paid to all the individuals in the department (production or sales) which performed most above expectations. Which department will receive the 2010 bonuses?
You may find the problem in the attached file as well, please present solution in an excel file with all necesary computations.