Page 1 of 3 Problem 1 Outdoors produces high-end camping tents. The following information is available for the years 2020 (right column) and 2021 (left column): XXXXXXXXXX Number of tents produced and...

1 answer below »
Please refer to the PDF for questions.


Page 1 of 3 Problem 1 Outdoors produces high-end camping tents. The following information is available for the years 2020 (right column) and 2021 (left column): 2021 2020 Number of tents produced and sold 5,500 5,000 Selling price $440 $400 Direct materials (kg) 15,375 15,000 Direct materials costs per kg $44 $40 Manufacturing capacity for tents 10,000 10,000 Conversion costs $1,100,000 $1,000,000 Conversion costs per unit of capacity $110 $100 Selling and customer-service capacity (customers) 58 60 Total selling and customer-service costs $362,500 $360,000 Selling and customer-service capacity cost per customer $6,250 $6,000 Outdoors has zero defective production and planned to reduce direct materials usage per tent in 2020. Manufacturing conversion costs in each year depend on production capacity defined in terms of the number of tents that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Outdoors has 50 customers in 2020 and 57 customers in 2021. The industry market size for camping equipment increased 5% from 2020 to 2021. Required: In explaining the change in Outdoors’ operating income from 2020 to 2021: (a) What is the revenue effect of the growth component? (2 marks) (b) What is the revenue effect of the price-recovery component? (2 marks) (c) What is the net effect on operating income as a result of the productivity component? (5 marks) For all effects, indicate whether they are favourable or unfavourable. Problem 2 Nature Bees produces honeycomb and beewax. The production is made in two decentralised divisions. The Honey Farm Division produces honeycomb at a variable cost of $20 per kg. Honeycomb and can be sold at $30 per kg. The Wax Farm Division produces 0.50 kg of beewax from 1 kg of honeycomb at a variable cost of $12 plus the cost of the honeycomb. Beewax can be sold at $95 per kg. The processing of honeycomb into beewax is done by the worker bees in the division’s beehive box. The worker bees work 35 hours per week in the beehive box. Required: (a) Propose an ideal transfer price for Nature Bees and explain with calculations why the proposed price is ideal. (6 marks) (b) The current production process at Natural Bees is that Natural Bees receives orders for 45 kg of beewax on a weekly basis. It takes 40 minutes for 2 kg of honeycomb to be processed by into 1 kg beewax in the beehive box. Identify three independent scenarios where the customer wait time would decrease at Natural Bees? (3 marks) Page 2 of 3 Problem 3 Information below relates to a manufacturing company that uses a standard costing system for planning and control purposes. The company applies the following standards to account for its production costs. Direct Materials (15 kg @ $6.00 per kg) $90.00 Direct Labour (4 hours @ $15.00 per hour) 60.00 Variable Overhead (10 machine hours @ $4.00 per machine hour) 40.00 Fixed Overhead (10 machine hours @ $5.00 per machine hour) 50.00 Standard cost per unit of output $240.00 Information regarding the company’s 2020 operation is available below: Actual Production Master Budget Number of output units 19,000 18,000 Direct materials $1,976,500 $1,620,000 Direct labour 1,116,000 $1,080,000 Variable Overhead 861,000 720,000 Fixed Overhead 970,000 900,000 Total $4,923,500 $4,320,000 Additional information: • 335,000 kg of raw materials were purchased and used during the year. • 72,000 direct labour hours were worked during the year. • 210,000 machine hours were worked during the year. • During the year a factory supervisor retired and was not replaced. • Defective materials delivered by a supplier had gone undetected before use in production. This defective material caused the additional use of 30,000 kg of raw materials; 1,000 labour hours, and 2,500 machine hours to meet the required production. Required: Calculate all level-3 variances for direct labour (DL), variable and fixed overhead costs in 2020. Indicate whether each variance is favourable or unfavourable; present your workings in the worksheet format. (9 marks) Page 3 of 3 Problem 4 The SECaT Course survey at the University of Queensland consists of the following questions to seek feedback from students regarding course quality: 1. I had a clear understanding of the aims and goals of the course. 2. The course was intellectually stimulating. 3. The course was well structured. 4. Course experiences, tools or materials were useful for my learning. 5. Assessment requirements were made clear to me. 6. I received helpful personal or group feedback on how I was going in the course (in person or online). 7. I learned a lot in this course. 8. Overall, how would you rate this course? 9. What were the best aspects of this course? 10. What improvements would you suggest? Required: Critically evaluate the SECaT teaching survey as a tool to evaluate a lecturer’s performance in teaching AND discuss any behaviour implications. (8 marks) Hint: consider the following - controllability, responsibilities and the characteristics of a balanced performance evaluation tool (such as a balanced scorecard). You are encouraged to refer to specific survey questions in your discussion. This problem does not require your responses to the SECaT questions. Semester_Two_Final_Examinations_2021_ACCT7107 (PART A).pdf Semester_Two_Final_Examinations_2021_ACCT7107 (PART B).pdf
Answered Same DayJun 16, 2022

Answer To: Page 1 of 3 Problem 1 Outdoors produces high-end camping tents. The following information is...

Prince answered on Jun 16 2022
75 Votes
Problem 1:
    Operating Income
    Particular
    2021
    2020
    Sales
    $2,420,000.00
    $2,000,000.00
    Expenses:
     
     
    Direct materials
    $676,500.00
    $600,000.00
    Conversion cos
ts
    $1,100,000.00
    $1,100,000.00
    Total selling and customer-service costs
    $362,500.00
    $360,000.00
    Total Costs
    $2,139,000.00
    $2,060,000.00
    Operating Income
    $281,000.00
    -$60,000.00
a. Revenue effect of the growth component:
= (Actual Units Sold in 2021 – Actual Units Sold in 2020 )* Sale Price in 2020
= (5,500 – 5,000) * $400
= $200,000
Thus, Revenue effect of the growth component is $200,000 (F)
b. Revenue effect of the Price-Recovery component:
= (Actual Price in 2021 – Actual Price in 2020 )* Actual Units Sold in 2021
= ($440 – $400) * 5,500
= $220,000 (F)
Thus, Revenue effect of the growth component is $220,000.
c. The Productivity Impact:
Variable Costs:
= (Actual Units of Input used in 2021 – Units of Input which would have required to produce 2020 Output in 2020)*Input Price in 2021
Direct Materials = (15375 – 16500) * $44 =                 $49,500 (F)
Conversion Cost = (10000 – 10000) * $110 =                     0
Selling & Customer Cost = (58 – 60) * 6,250 =                 $125,00 (F)
Net Effect due to Productivity Impact                    $62,000 (F)
Problem 2:
a. Calculation:
    Particular
    Honeycomb (Per KG)
    Beewax (Per KG)
    Marketing Selling Price
    $30
    $95
    Expenses:
    
    
    Production Cost
    $20
    $24
    Transfer Cost
    0
    $60
    Total Expense
    $20
    $84
    Profit
    $10
    $11
The Market Price will be the best transfer pricing for Nature bees. While a transfer price based on the market price of the transferred items should allow both divisions to profit, it also carries the danger of fostering dysfunctional decision making when the ultimate selling price approaches the group marginal cost....
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here