ASSIGNMENT 1: MASTER BUDGETS
Standard Productions Ltd (SPL) produces plastic bottles and the standard cost of each product is:
|
|
€
|
|
Sales
|
25
|
|
Direct labour (2 hrs)
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(5)
|
|
Direct materials (1 kg)
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(10)
|
|
Fixed overheads
|
(3)
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|
Standard profit
|
7
|
The budgeted output for SPL in March was 1,000 units of plastic bottles; the actual output was 1,100 units, which was sold for €28,200. There were no stocks of any description at either end of March. The actual production costs were:
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Direct labour (2,150 hrs)
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5,550
|
|
Direct materials (1,170 kgs)
|
11,630
|
|
Fixed overheads
|
3,200
|
Required:
1. Calculate the variances (state the actual master budget, the actual and the flexed budgets) for March as fully as you are able to from the available information.
2. Use the variances calculated to reconcile the budgeted and actual profit figures of SPL.
3. Evaluate and comment on the overall variances from budget to actual and the monitoring of budgets at SPL.
ASSIGNMENT 2 - SYSTEMS & PRICING
Due to uncertain trading conditions in 2016, Aberphones have decided to introduce two new mobile phones into their range for the following year to increase total sales. The management accountant has provided the estimated costs and revenues for the two new phones as follows:
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Unit cost data (€)
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Basic (€)
|
Standard (€)
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Selling price
|
50
|
65
|
|
Materials
|
25
|
30
|
|
Labour
|
5
|
6
|
|
Variable overhead
|
2.50
|
4
|
|
Annual costs
|
|
Rent
|
50,000
|
|
Salaries
|
75,000
|
|
Marketing
|
25,000
|
Required:
(a) Estimate the break-even point showing clearly the number of units that will need to be sold and discuss the importance of costs in the pricing of the phone when the break-even-point is established.
(b) Calculate the profit of Aberphones if they reach their target of selling 4,500 units sold.
(c) The Sales Director has suggested that if the Standard phone is modified she could further increase the sales of this phone to 80% of the total volume. However this modification will increase the material cost by a further 7.50 per unit but the annual costs will remain the same. Should Aberphones consider modifying the Standard phone?
(d) If you were the management accountant of Aberphones what other non-financial factors should they consider before deciding to produce these two new models?