Accounting Tools and Measures
LeeTampa
IG009_Assessment_Scenarios.docxIG009 Assessment Scenarios
Part I: Performance Report and Variances
HBC Static Budget Report
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Honey Bear Confections (HBC) Manufacturing Overhead Static Budget Report For Month Ended June 20XX |
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Budget |
Actual |
Variance (U or F) |
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Production in bags of candy |
10,000 |
12,000 |
2,000F |
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Costs: |
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Indirect labor |
$26,000 |
$31,200 |
$5,200U |
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Supplies |
25,000 |
29,500 |
4,500U |
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Utilities |
19,000 |
22,500 |
3,500U |
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TOTAL |
$70,000 |
$83,200 |
$13,200U |
Part II: Making Investment Decisions Using NPV, ARR, IRR, and Payback
Investments
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Investment A |
Investment B |
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Required Investment |
$50,000 |
$150,000 |
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Annual Cash Flows |
20,000 |
56,000 |
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Annual Net Income |
8,000 |
34,000 |
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Project Life |
5 years |
5 years |
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Cost of Capital |
10% |
10% |
Part V: Computing Variances Using Standard and Actual Costs
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Healing Touch Standard and Actual Costs |
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Standard Cost Sheet: Massage Chair |
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Metal tubing |
6 meters @ $3 |
$18.00 |
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Leather |
2 square meters @ $7 |
14.00 |
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Padding |
3 kilograms @$4 |
12.00 |
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Direct labor |
4 hours @ $15 |
60.00 |
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Total standard cost |
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$104.00 |
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Actual Costs Incurred for the Month: Massage Chair |
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Metal tubing |
3,100 meters |
$9,455 |
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Leather |
1,100 square meters |
7,722 |
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Padding |
1,600 kilograms |
6,560 |
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Direct Labor |
1,800 hours |
27,270 |
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Total cost |
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$51,007 |
Part VI: Break-Even Point
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Dr. Lucy Zang—Happy Feet Store |
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Selling Price |
$220 |
per shoe |
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Operating Costs: |
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Cost of shoes |
$110 |
per shoe |
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Other Costs: |
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Fixed Rent |
$13,333 |
monthly |
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Variable Rent |
3% |
of sales |
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Other |
$38,000 |
monthly |
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Interest |
$11,667 |
monthly |
