Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.

Standard Cost per Unit Actual Cost per Unit
Direct materials:
Standard: 1.80 feet at $3.00 per foot $ 5.40
Actual: 1.80 feet at $3.30 per foot $ 5.94
Direct labor:
Standard: 0.90 hours at $18.00 per hour 16.20
Actual: 0.92 hours at $17.50 per hour 16.10
Variable overhead:
Standard: 0.90 hours at $5.00 per hour 4.50
Actual: 0.92 hours at $4.50 per hour 4.14
Total cost per unit $ 26.10 $ 26.18
Excess of actual cost over standard cost per unit $ 0.08
The production superintendent was pleased when he saw this report and commented: “This $0.08 excess cost is well within the 2 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."

Actual production for the month was 12,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.

Required:
Compute the following variances for May:
Materials price and quantity variances.
Labor rate and efficiency variances.
Variable overhead rate and efficiency variances.
How much of the $0.08 excess unit cost is traceable to each of the variances computed in requirement 1.
How much of the $0.08 excess unit cost is traceable to apparent inefficient use of labor time?

Answers

Answer 1

The actual quantity is 21,600, Direct material price variance is $6,480, Standard quantity is 21,600, Direct material quantity variance is 0, Direct labor rate variance is $5520, Direct labor efficiency variance is $4320.

Give a brief account on Variance analysis.

Comparison of budgeted data and actual performance is part of variance analysis. This offers crucial feedback for enhancing business performance in the future. Depending on whether budgeted targets are met, variations are typically categorized as favorable or unfavorable.

To solve the question :

Requirement : 1

a. Actual quantity :

Given:

Number of the units = 12,000

The standard quantity per unit = 1.80

The actual quantity

= (Number of the units × standard quantity)

=12,000 × 1.80

= 21,600

b.Direct material price variance.

Given,  

Standard price = $3.00

Actual price = $3.30

Direct material price variance

= (actual - standard price) × actual quantity.

​= ($3.30−$3.00) × $21,600

= $6,480 Unfavaourable

c. Standard quantity :

Given,  

Number of the units = 12,000

The standard quantity per unit = 1.80

= (Number of the units × standard quantity per unit)

= 12,000 × 1.80

= 21,600

d. Direct material quantity variance :

Given,

Actual quantity = 21,600

Standard quantity = 21,600

Standard price = $3.00

Direct material quantity variance

= (Actual quantity - Standard quantity) × Standard price

​= (21,600 − 21,600) × $3.00

= $0.00

e. Direct labor rate variance.

Given,  

The actual hours ( 0.92 × 12,000 ) = 11,040

The actual rate per hour = $17.50

The standard rate per hour = $18.00

Direct labor rate variance

= (actual hours ×  actual rate per hour) - ( actual hours - standard rate per hour)

​= (11,040 × $17.50) − (11,040 × $18.00)

= $5,520 Favourable

f. Direct labor efficiency variance.

Given,

The standard rate per hour = $18.00

The actual hours ( 0.92 × 12,000 ) = 11,040

The standard hours ( 0.90 × 12,000) = 10,800

Direct labor efficiency variance

= (standard hours ×  standard rate per hour) - ( actual hours - standard rate per hour)

​= (10,800 × $18.00) − (11,400 × $18)

= $4,320 Unfavourable

g. Variable overhead rate variance.

Given,  

The actual labor hours ( 0.92 × 12,000 ) = 11,400

The standard rate per hour = $5.00

The actual rate per hour = $4.50

Variable overhead rate variance :

= ( actual labor hours ×  standard rate per hour) - ( actual labor hours × actual rate per hour)

​= (11,400 × $5.00) − (11,400 × $4.50)

= $5,520 Favourable.

h. Variable overhead efficiency variance.

Given,

The actual hours ( 0.92 × 12,000 ) = 11,040

The standard hours ( 0.90 × 12,000) = 10,800

The standard rate per hour = $5.00

Variable overhead efficiency variance

=  (actual hours × standard rate per hour) - ( standard hours  × standard rate per hour)

​= (11,400 × $5.00) − (10,800 × $5.00)

= $1,500 Unfavourable.

Requirement 2 :

This time, we will determine the indirect effect of the $0.08 extra unit cost over the calculation of spending variances. The unfavourable direct material price variance is $6,480. The variation in the direct material quantity is $0.00. The $6,480 unfavourable differences in direct material spending.

The favourable direct labor rate variance is $5.520. The $4,320 unfavourable direct labor efficiency variance. The variations in direct labor costs are favourable by $1,200. The favourable variable overhead rate variance is $5,520. The $1,500 unfavourable variance in overhead efficiency. The favourable variable overhead variances total $4,020.

The $1,260 in unfavourable spending variances total. The total spending variations are $1,260 unfavourable as a result of the unfavourable material spending variances.

The $0.08 primary effect is therefore on the material spending variances.

Requirement 3 :

Inefficient use of the labor time :

Given,

The actual hour per item = 0.92

The standard hours = 0.90

The number of units = 1,200

Inefficient use of labor time

= (number of units × (actual hour per item - standard hours))

​= (1,200 × (0.92 − 0.90)

= 240

Conclusion :

The total variations are negative because of the material spending variances, even if the $0.08 additional unit cost represents only 0.3% of the unit pricing. Although there are positive labor variations, 240 hours of labor time are used inefficiently.

As a result, the indirect harm caused by the $0.08 extra unit cost is as follows:

as a result of the variancesin the ineffective use of labor hours.

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Answers

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Expected return on COLA exists 2.1% in the next year and expected return on GAS exists 0.8% then the expected return on the portfolio exists 1.45%.    

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Here, we have, Asset 1 = COLA with weight = 50%

                                       Expected Return = 2.1%

                       Asset 2 = GAS with weight = 50%

                                       Expected Return = 0.8%

Let the equation be,

Expected Portfolio Return = (Asset 1 Weight × Expected Return) + (Asset 2 Weight × Expected Return)

Putting the values in the formula, we get

= (50% × 2.1%) + (50% × 0.8%)

= 1.45%

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the crowding-out effect refers to the possibility that multiple choice the asset demand for money varies inversely with the interest rate. deficit financing will increase the interest rate and reduce investment. when used simultaneously, expansionary fiscal and monetary policies are counterproductive. an increase in the supply of money will result in a decline in velocity.

Answers

The crowding-out effect refers to the possibility that deficit financing will increase the interest rate and reduce investment.

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Other economists use the term "crowding out" to describe the government supplying an item or service that would otherwise be available to private enterprise and be subject exclusively to the market dynamics found in voluntary trade.

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the crowding-out effect refers to the possibility that multiple choice the asset demand for money varies inversely with the interest rate. deficit financing will increase the interest rate and reduce investment. when used simultaneously, expansionary fiscal and monetary policies are counterproductive. an increase in the supply of money will result in a decline in velocity.

jimmy owns several dry cleaners. he makes a profit every year and pays his people well, but it is also important to him that he give back to the community. jimmy donates free dry cleaning to people in temporary and transient housing and he uses environmentally safe materials to clean the clothes. jimmy is most demonstrating

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The right answer is Option A. Mike is most demonstrating as a community stakeholder because he is running his business more business-minded and does not give back to the community. Therefore, he has a stake (Loan) in the community over his head.

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The principle that describes how a change in a property affects the overall property value is know as principle of contribution.

Write a short note on principle of contribution.

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A multinational enterprise, abbreviated as MNE and every now and then additionally referred to as multinational organization (MNC), just multinational or worldwide corporation, is an organization producing items or turning in offerings in extra than one country

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patagonia is considering the sales of a sweater for the winter season. the sweater will be sold for only one season. the company has plans to sell each sweater at $220, and it purchases the sweaters from its supplier at $120 per unit. the company knows that it can salvage any leftover sweaters at $80 at outlet stores. based on the experience of previous seasons, experts at the company are predicting the sales to range between 3,000 and 8,000 with the associated probabilities:

Answers

The company are predicting the sales to range between 3,000 and 8,000 with the associated probabilities is 8000 when probability is 0.85.

Cu is equal to 140 minus 70, which equals 70.

Co = Salvage Value - Purchase Price = 70 - 50 = 20

Level of Service = Cu/(Cu + Co)

Level of Service = 70/90

77.78% of the service level is 0.7778.

The demand information and corresponding cumulative likelihood are shown below.

Compound Probability

Demand Probability Cumulative Probability

4,000 0.1 0.1

5,000 0.15 0.25

6,000 0.25 0.5

7,000 0.2 0.7

8,000 0.15 0.85

9,000 0.15 1

We must find the demand level that corresponds to the cumulative probability that is just little higher than the service level 77.78%. Nest higher to 77.78% is 85% from above (or 0.85).

Demand equals 8000 when probability is 0.85.

Consequently, the ideal order size is 8000.

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The prime money fund, government money fund, treasury fund, and tax-free fund are among the several money market fund varieties. Because they are completely backed by the government's credit, treasury assets typically carry the lowest level of risk.

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The product line manager's $60,000 salary is avoidable as is the $20,000 of advertising. Of the administrative expenses, $10,000 is avoidable. The rest are general allocated expenses that will not change if the product is dropped. The rent expense is allocated to product lines based on sales and represents a share of the total cost for the building. If this product line is dropped, what will happen to the company's overall net income?

Answers

There will be a $34,000 drop in overall net income. The $124,000 contribution margin will be forfeited by the business. Only $90,000 of a fixed costs (salary, advertising, and administrative expenses) are avoidable, resulting in a $34,000 decrease in net income.

The contribution margin is what?

The total amount of revenue left over after overhead expenses to pay for fixed costs and turn a profit for the business is shown by the contribution margin, according to Knight. This could be viewed as the component of sales which helps to cover fixed expenses.

Contribution margin: Is it profitable?

While contribution margin is indeed the amount of revenue left over after deducting variable costs from revenue, gross margin is the profit that remains after the cost of goods marketed from revenue.

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What is the proper course of action if a phone number in an advirtisment does not appear valid

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Tricky or deluding notices are confined under different regulation including the Buyer Assurance Act, 1986; the Digital Telecom company Rules, 1994; the Standards for Columnist Direct gave by the Press Chamber of India Act, and the ASCI Code.

What is the brilliant rule of promoting?

In the present showcasing, the Brilliant Rule requests that you center around your needs, requirements, and points of view. In any case, the best advertising out their centers around your crowd's needs, necessities, and viewpoints.

For what reason is it vital to assess adequacy of promoting?

Promotion viability is an imperative procedure for brands hoping to comprehend the effect of their promotions on the crowds they need to impact. It assists companies with really figuring out the compass of their missions so they can zero in on the components that were fruitful and apply them to future endeavours.

What are the fundamental of a compelling testing of publicizing adequacy?

To quantify the promoting viability, we should have the option to assess every one of the parts of the correspondence components. These are the Source, Message, Media and Financial plan. It must be seen whether the source is powerful and the way that the objective market will answer it.

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which of the following statements least likely represents a characteristic of the time-weighted rate of return? it is:
a. not affected by the timing of cash flows
b. used to measure the compound rate of growth of $1 over stated measurement period
c. defined as the internal rate of return on an investment portfolio, taking into account all inflows and outflows

Answers

Least likely represents a characteristic of the time-weighted rate of return c. defined as the internal rate of return on an investment portfolio, taking into account all inflows and outflows.

What is your investment's internal rate of return?

The predicted yearly rate of growth from an investment is known as the internal rate of return (IRR). Similar to how net present value (NPV) is determined, IRR does so by setting NPV to zero.

The internal rate of return (IRR) measures how much money a project will make over time to make up for its initial expenditure. It is accomplished when the project's Net Present Value (NPV) is equal to zero. A profitable investment opportunity is indicated by an IRR greater than the discount rate.

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when a minor posting at a business allows minors to be on the premises until 9:00 pm, at 9:00 pm minor employees and minor service permittees who are on duty: must call their manager at 9:00 pm for a ride home must not be involved in the sale or service of alcohol but can continue to restock supplies, set and clear tables and deliver food must stop working but can sit at the bar may continue to take orders for food and alcohol after 9:00 pm

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When a minor posting at a business allows minors to be on the premises until 9:00 pm, at 9:00 pm minor employees and minor service permittees who are on duty must call their manager at 9:00 pm for a ride home

A work schedule refers to the daily and weekly working hours that are specified in an employee's employment contract. The hours an employee works have an impact on their wages, obligations, benefits, and legal obligations. To accommodate your extended hours, you may either construct a general timetable for your staff members or assign them to shifts.

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1- Explain with examples Noodles & Co.’s current business strategy.

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Having a sound restaurant strategy plan considerably improves your capacity for original thought and thinking outside the box. The standard of the cuisine, the setting, the service, and the presence on social media are just a few of the numerous factors that must be taken into account when creating a company plan.

What is Business?

An organization or entrepreneurial entity engaging in commercial, industrial, or professional activity is referred to as a business. A business's goal is to coordinate some form of economic output (of goods or services). Businesses can be for-profit corporations or nonprofit organizations working to further a social cause. Businesses vary in size and scope from small, local enterprises to enormous, global conglomerates.

Business planning is frequently necessary before activities can start. A business plan is a formal document that specifies the strategies and plans the firm will use to accomplish its goals and objectives. When you want to borrow money to start your business, you must have a strategy.

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Suppose that in 2020, the producer price index increases by 2 percent. As a result, economists most likely will predict that
Select one:
a. GDP will increase in the next year.
b. the exchange rate will increase in the future.
c. the consumer price index will increase in the future.
d. next year the producer price index will fall.

Answers

Typically, an increase in the PPI indicates that inflation is imminent. At some point, producers will attempt to pass on price increases to consumers. The Consumer Price Index can shift in response to a shift in the PPI.

In 2020, what will be the formula for the Consumer Price Index?

An illustration of the CPI formula is the amount of $8.50 for 2020 products. At the point when you partition the ongoing item cost complete by the past cost absolute, your condition is 8.50/6.75 = 1.26. After that, you would divide this total by 100, which would give you 125.9: 1.44 x 100.

What occurs when the consumer price index rises?

When the Consumer Price Index (CPI) moves up, it indicates that prices have changed more frequently on average over time. This eventually results in adjustments to income and the cost of living (presumably to meet a higher cost of living). This interaction is alluded to as indexation.

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Initial investment at various sale prices Edwards Manufacturing Company (EMC) is considering replacing one machine with another. The old machine was purchased 3 years ago for an installed cost of $10,000. The firm is depreciating the machine under​ MACRS, using a​ 5-year recovery period.​ (See table LOADING... for the applicable depreciation​ percentages.) The new machine costs $23,900 and requires $2,070 in installation costs. The firm is subject to a 40% tax rate. In each of the following​ cases, calculate the initial investment for the replacement. a. EMC sells the old machine for $12,400. b. EMC sells the old machine for $7,000. c. EMC sells the old machine for $2,900. d. EMC sells the old machine for $1,520.

Answers

a) If Edwards Manufacturing Company (EMC) sells the old machine for $12,400, the initial investment is $13,500.

b) If Edwards Manufacturing Company (EMC) sells the old machine for $7,000, the initial investment is $18,900.

c) If Edwards Manufacturing Company (EMC) sells the old machine for $2,900, the initial investment is $23,000.

d) If Edwards Manufacturing Company (EMC) sells the old machine for $1,520, the initial investment is $24,380.

What is the initial investment for a replacement asset?

The initial investment for a replacement asset can be determined by adding the cost of the equipment to the installation costs of the new equipment and subtracting the sale proceeds of the old machine being replaced.

The cost of the old machine = $10,000

Period of use = 3 years

Accumulated depreciation based on the 5-year MACRS = $7,120 ($10,000 x 71.2%)

Book value = $2,880 ($10,000 - $7,120)

Cost of new machine = $23,900

Installation cost = $2,070

The total installed cost of new machine = $25,900 ($23,900 + $2,070)

a) Old machine sold for $12,400

Initial investment = $13,500 ($25,900 - $12,400)

b) Old machine sold for $7,000

Initial investment = $18,900 ($25,900 - $7,000)

c) Old machine sold for $2,900

Initial investment = $23,000 ($25,900 - $2,900)

c) Old machine sold for $1,520

Initial investment = $24,380 ($25,900 - $1,520)

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Question Completion:

MACRS 5-year Declining Method:

Year     Depreciation Rate

1                     20%

2                    32%

3                    19.20%

4                    11.52%

5                    11.52%

6                    5.76%

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