(Answered) Standard Costing to Help Costs and Standards

HW chapter 11;Standard costing;Lilo company is owned by Lila Lilo, and is in the business of making fashionable hats.;The materials used consist of a man-made plastic like material for the hat itself and several yards of a ribbon-like material that are wound around the hat and glued to it in different configurations. Lilo's direct labor force consists of two types of workers: the people that cut out the material to specifications, and the workers that glue the hat together and then glue the material to the hat. The company has decided to use standard costing to help control its costs, and has developed the following standards for materials and labor;Direct materials;Quantity price;Hat base;.75 square yard $10.00/square yard;Ribbon 3.5 yards $12.00/square yard;Direct labor hours rate;Cutters 0.75 $15.00/hour;Gluers 1.5 $20.00/hr;During the most recent month, lilo had the following production and costs;Production: 2,100 hats;Direct material costs;Hat base 1600 square yards for total cost of $23,600;Ribbon 5,250 square yards for a total cost of $65,625;Direct labor costs;Cutters 1600 hours for a total cost of $22,500;Gluers 2500 hours for a total cost of $52,500;Required: a) calculate the direct material price and quantity variances for each material then, calculate the direct labor rate and efficiency variances for both types of direct laborers. Be sure to indicate unfavorable or favorable, do not skip a space between the answer and the letter u or f.;b) Lilo company began to receive complaints about a week after it had sent off a shipment of the hats made in April. Customers complained that the hat bases were showing through the material, and that the ribbon material was coming unglued from many of the hats. From looking at your variance reports and the highest variances, what would you surmise had happened?;Pick list;Cutters spent too much time on each hat.;Gluers didn't spend as much time on each hat, used less ribbon.;Gluers spent too much time on each hat, used too much ribbon.;Hat base too cheap, couldn't add as much ribbon;Ribbon material too cheap, workers had to use too much of it.;Ribbon material too expensive, workers couldn't use as much.;-----------------;CHAPTER 12 HOMEWORK;RESPONSIBILITY ACCOUNTING;This homework assignment has 2 problems.;1) The following information was taken from the accounting records of Lordoftheflies Corporation, which;consists of 2 major business segments: Fertilizer and Compost;Sales revenues, Fertilizer $20,100,000;Sales revenues, Compost $55,000,000;Variable expenses, Fertilizer $6,900,000;Variable expenses, Compost $21,000,000;Traceable fixed expenses, Fertlizer $10,000,000;Traceable fixed expenses, Compost $15,000,000;Common fixed expenses totalled $20,000,000 and was allocated as follows;$5,000,000 to Fertilizer and $15,000,000 to Compost.;REQUIRED: Complete the segmented income statements shown. Then use your;information to answer the following question: should the Fertlizer segment of;Lordoftheflies Corporation be dropped or retained?;2) Lordoftheflies Corporation is evaluating its two divisions, Fertlizer and Compost. Currently;the company uses Return on Investment (ROI) to evaluate its divisions. It is considering;using Residual Income. Compute both ROI and Residual Income for both divisions;assuming that LordoftheFlies' minimum required return is 15%. Use the calculation;for ROI in terms of Margin and Turnover.;Sales, Fertilizer $20,000,000;Sales, Compost $55,000,000;Net operating income, Fert $3,000,000;Net operating inc, Compost $11,000,000;Average operating assets, Fertilizer $30,000,000;Average operating assets, Compost $45,000,000;Fertlizer Compost;Margin 26 27;Turnover 28 29;ROI 30 31;Residual income 32 33;-----------------;HW CHAPTER 13;RELEVANT COSTING;WORK TWO OUT OF THE THREE PROBLEMS BELOW;1) Elphaba Company makes various potions, broomsticks and other products for the witch trade. The following is the cost of one of its most popular products;the Mandrake Mannequin;Direct materials $190.00;Direct labor 50;Applied overhead 80;Cost per one unit $320.00;The Mandrake Mannequin currently sells for $450 each. Elphaba is not operating at capacity, therefore it could produce more units without affecting its;current sales. An overseas buyer has offered to buy 1,000 of the units for $300 each.;Elphaba's overhead is applied using direct labor hours. Currently, the total estimated overhead is $2,000,000, which consists of $1,500,000 fixed overhead;and $500,000 variable overhead. The company estimates it will use 10,000 direct labor hours for the year.;Is the overseas buyers' offer financial attractive? Show your work below.;Relevant cost per unit;type of input cost;1 2;3 4;5 6;total 7;Price per unit 8;9 10;11 12 x;2) Collins Company makes a popular product called the Moonstone, which glows in the dark and growls at intruders. The costs of;one of the components of the Moonstone, the nightlight are listed below;Direct materials $2.50;Direct labor 1.5;Overhead 7.5;total per unit $11.50;An outside supplier has offered to manufacture the nightlights for the Moonstone at a cost of $8.00 each. Collins is presently producing;30,000 Moonstones per year. If Collins awards the contract to the outside supplier, it will save on its variable costs. 1/3 of the overhead;per unit is variable overhead. None of the fixed overhead would be saved by shifting production to an outside supplier. Is it cost-effective;to outsource the nightlight to the outside supplier?;ANALYSIS;TOTALS;COST OF NIGHTLIGHTS FROM OUTSIDE SUPPLIER 15;MONEY SAVED ON ALL VARIABLE COSTS 17;MONEY SAVED ON FIXED COSTS 19;DIFFERENTIAL IN FAVOR OF 21;Attachments;CHAPTER_11_-_STANDARD_COSTING.xls;chapter_12_-_responsibility_accounting.xls;chapter_13.xls
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Standard Costing to Help Costs and Standards


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