Project 5 Problem 1 and Problem 2

There are 2 problems, which are set up on separate worksheets within this workbook. Please use this workbook as your exam template and prepare your solution on the specific problem worksheet. On the questions that I ask for comments and explanations, I expect more than a one sentence response. You need to make sure your response is answering my question. Problem 1 worth 8.5 pts and covers material from chapters 10 and 11. Problem 2 Worth 6.5 pts. And covers Chapter 11 material Submit one excel file containing your solution to this assignment. You must show your work to earn any credit, so just typing in the answer will not be acceptable and you will not earn credit. Referencing cells or typing out your calculations are acceptable methods of showing your work. Save your file using the first initial and last name and the assignment name. Remember it is your responsibility to take the time to verify that your file has uploaded correctly. If there are problems, please contact me immediately. Problem 1 Please make sure you review chapters 10 and 11, and the demonstrations from chapters 10 and 11. Worth 8.5 pts. Foster Corporation uses a standard cost system. There is no beginning or ending work in process, and finished goods inventory balances. The following information was provided concerning the one product produced by this company for the period that just ended: This company used Direct labor hours as the cost driver for the application of overhead. Actual price per kilogram $2.95 Actual kilograms of material used 31,500 Actual kilograms of material purchased 32,000 Actual hourly labor rate $17.50 Actual hours of production 4,900 labor hrs. Standard price per kilogram $2.96 Standard kilograms per completed unit 6 Standard hourly labor rate $17.90 Standard time per completed unit 1 Hour Actual Variable factory overhead $17,395.00 Actual Fixed factory overhead $18,200.00 Standard fixed factory overhead rate $3.25 per labor hour Standard variable factory overhead rate $3.80 per labor hour Budgeted fixed overhead $18,300.00 Units completed during the period 4,950 You have just been hired by a local plastic pool manufacturer to determine if they are controlling their costs. You have decided to use your recent knowledge of variance analysis from chapters 10 and 11 to assist you in this endeavor. You will analyze the variances as stated in the requirements below. Grading Rubric Each Variance worth 0.75 pts. Each U or F designation 0.25 pts. 1 pt. each for variance Comments 0.5 Total pts. Possible 8.5 pts. Required: Make sure you do not forget to label the variances U or F. 1. Calculate the direct materials price and quantity variance. Direct-material purchase price variance should be based on material purchased, since you want to isolate the variance as soon as possible. See bottom page 418 Direct-material Quantity variance should be based on materials used, since this is monitoring the production efficiency. See top of page 418. Direct-material purchase price variance Direct Material Quantity variance 2. Calculate the direct labor rate and efficiency variances. Direct Labor rate variance Direct Labor Efficiency variance 3. Variable manufacturing overhead spending and efficiency variances. Variable overhead spending variance Variable overhead efficiency variance 4. Fixed manufacturing overhead budget and volume variances. Fixed Manufacturing overhead budget variance Fixed overhead volume variance 5. Pick out the one most significant variance that you computed above and explain to me the possible causes of this variance and why you chose it. Problem 2 Worth 6.5 pts. Grading Rubric: Several years ago the Cookie Company developed a comprehensive budgeting system for profit planning and Each number in budget 0.2 pt. eachcontrol purposes. The line supervisors have been very happy with the system and with the reports being prepared U or F designation #2 0.25 pt. eachon their performance, but both middle and upper management have expressed considerable dissatisfaction with the Comments 0.5 information being generated by the system. The following is the overhead performance report for the Baking department. Total points possible 6.5 Cookie Company Overhead performance report-Baking department For the quarter ended March 31 Actual Budget Variance Units 33,000 36,000 3,000 U Variable Overhead Indirect materials 33000 34000 1000 F Rework time 8200 8500 300 F Utilities 65000 66,000 1000 F Machine setup 16200 17000 800 F Total variable overhead cost 122400 125500 3100 F Fixed overhead Costs Maintenance 79200 81000 1800 F Depreciation 10000 9800 200 U Inspection 60200 60000 200 U Total fixed overhead cost 149400 150800 1400 F Total overhead cost 271800 276300 4500 F After receiving a copy of this overhead performance report, the supervisor of the baking department stated, “These reports are super. It makes me feel really good to see how well things are going in my department. I can’t understand why those people upstairs complain so much.” Required: Hint: Make sure you have viewed the narrated PowerPoint for chapter 11 The company’s vice president has hired you as a consultant to develop a new overhead performance report for the quarter for the Baking department. After you have developed this new performance report, explain to the supervisor of the baking department the reasons for your changes and discuss the issue of controlling costs. Prepare the revised flexible performance report below. The categorization of variable and fixed are correct, so do not adjust this information. Please use the template I have set out below to complete this Performance report. Solution: Cookie Company Overhead performance report-Baking department For the quarter ended March 31 Actual Budget Variance Units Variable Overhead Indirect materials Rework time Utilities Machine setup Total variable overhead cost Fixed overhead Costs Maintenance Depreciation Inspection Total fixed overhead cost Total overhead cost Explain to the supervisor of the baking department the reasons for your changes and discuss the issue of controlling costs.