YOUR FINAL OUTPUTS…
Instructions: All of the reports that you need to prepare should be written/encoded on an
A4 paper and must be presented in good form.
COURSE OUTPUT 01
The management of GD Manufacturing is anxious to increase the company’s profit and has
asked for an analysis of a number of items. Prepare a Cost-Volume-Profit Analysis Report
by making a contribution format income statement (copy the format of the income statement
for the current year with the computed variable ratio and contribution margin ratio) for each
situation and identifying the other items required by the management. Assume that the
company’s contribution format income statement for the most recent year looks like what is
given below:
Situation A: Assume that sales increase by $400,000 next year.
Situation B: Assume that next year management wants the company to earn a profit of at
least $90,000.
Situation C: Assume that through a more intense effort by the sales staff, the company’s
sales increase by 8% next year.
Situation D: In an effort to increase sales and profits, management is considering the use
of a higher quality Material 143. The higher-quality Material 143 would
increase variable costs by $3 per unit, but management would eliminate one
quality inspector who is paid a salary of $30,000 per year. The sales manager
estimates that the higher-quality Material 143 would increase annual sales
by at least 20%.
For the other items needed by the management, please complete the table below and make
a recommendation as to what situation you think will be the most beneficial to GD
Manufacturing. Justify your advice using a minimum of 300 words.
Situation A Situation B Situation C Situation D
Breakeven XXX
sales in units
(except
Situation B)
Breakeven XXX
sales in
dollars
(except
Situation B)
Target sales XXX XXX XXX
in units (for
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Situation B
only)
Target sales XXX XXX XXX
in dollars (for
Situation B
only)
Margin of
safety in
units
Margin of
safety in
dollars
Degree of
Operating
Leverage
COURSE OUTPUT 02
Assume that during the current period, GD Manufacturing sold 60,000 units of product at
$30 per unit. At the beginning of the period, there were 10,000 units in inventory and GD
manufactured 50,000 units during the period. The manufacturing costs and selling and
administrative expenses were as follows:
The management of GD manufacturing wants you to prepare income statements both for
external reporting use (absorption costing method) and internal use (variable costing
method). Also, if ever there will be a difference in the income computed using the two
different methods, the management wants you to provide an explanation.
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COURSE OUTPUT 03
Lowkey, Inc. manufactures bags made out of woven organic fabric for national distribution.
The standard costs for the manufacture of native style bags were as follows:
Standard Costs Actual Costs
Direct materials 1,500 lbs. at $36 1,600 lbs. at $32
Direct labor 4,800 hrs. at $11 4,500 hours at $11.80
Factory overhead Rates per labor hour, based
on 100% of normal capacity
of 5,500 labor hours:
Variable cost, $2.40 $12,300 variable cost
Fixed cost, $3.50 $19,250 fixed cost
Determine the following cost variances:
a. Materials Quantity Variance
b. Materials Price Variance
c. Total Material Variance
d. Labor Time Variance
e. Labor Rate Variance
f. Total Labor Variance
g. Total FOH Variance
h. Controllable Variance
i. Volume Variance
j. Spending Variance
k. Variable Efficiency Variance
l. Variable Spending Variance
m. Fixed Spending Variance
n. Variable Controllable Variance
o. Fixed Volume Variance
p. Variable FOH Variance
q. Fixed FOH Variance
The management also wants you to prepare a summary report on the probable cause or
causes of the following variances, as computed, and to identify the person primarily
responsible for such variance.
Type of Amount Probable Cause Best
Variance Person/Department
to Explain
Materials
Quantity
Variance
Materials Price
Variance
Labor Efficiency
Variance
Labor Rate
Variance
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Overhead
Variance
COURSE OUTPUT 04
The management of March Sisters Co. wants you to prepare the following budgets for the
month of July:
1. Sales budget
2. Production budget
3. Direct materials purchases budget
4. Direct labor cost budget
5. Cost of goods sold budget
Selected information concerning sales and production of March Sisters Co. for July 2020 are
summarized as:
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a. Estimated sales:
Product K: 40,000 units at $30.00 per unit
Product L: 20,000 units at $65.00 per unit
b. Estimated Inventories, July 1, 2020:
Material A: 4,000 lbs. Product K: 3,000 units at $17 per unit $51,000
Material B: 3,500 lbs. Product L: 2,700 units at $35 per unit 94,500
Total $145,500
There were no work in process inventories estimated for July 1, 2020.
c. Desired Inventories at July 31, 2020:
Material A: 3,000 lbs. Product K: 2,500 units at $17per unit $42,500
Material B: 2,500 lbs. Product L: 2,000 units at $35 per unit 70,000
Total $112,500
There were no work in process inventories desireded for July 31, 2020.
d. Direct materials used in production:
Product K Product L
Material A: 0.7 lb. per unit 3.5 lbs. per unit
Material B: 1.2 lbs. per unit 1.8 lbs. per unit
e. Unit costs for direct materials:
Material A: $4.00 per lb.
Material B: $2.00 per lb.
f. Direct labor requirements:
Department 1 Department 2
Product K 0.4 hr. per unit 0.15 hr. per unit
Product L 0.6 hr. per unit 0.25 hr. per unit
g. Direct labor rate $12.00 per hr. $16.00 per hr.
h. Estimated factory overhead costs for July:
Indirect factory wages $200,000
Depreciation of plant & equipment 40,000
Power and light 25,000
Indirect materials 34,000
Total $299,000
COURSE OUTPUT 05
Management of U Got It All Shop of Pawing, Palo, would like to reduce the amount of time
between when a customer places an order and when the order is shipped. For the operations
in the year 2020, the following data were reported:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Inspection time 3 days 6 days 4 days 3 days
Wait time 14 days 14 days 10 days 12 days
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Process time 5 days 10 days 7 days 5 days
Move time 2 days 7 days 7 days 2 days
Queue time 5 days 7 days 5 days 5 days
Complete the table below and comment (that is, identify the indications of the results
and give advice) on the results for each quarter and the overall results for the year
2020.
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
Value-Added Time
Non-Value Added Time
Delivery Cycle Time
Manufacturing Efficiency Time
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