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Instructor’s Manual / Solutions Manual
E15.16.
(continued)
E15.17.
a.
DuPont Performance Analysis:
Central Division
Margin (Operating income / Sales)………...
10%
($16,000 / $160,000)
E15.18.
a.
DuPont Performance Analysis:
Division X
Division Y
Division Z
Revenues…………………………………...
$1,000,000
$ 300,000
$ 1,250,000
Operating Income…………………………..
$ 120,000
$ 36,000
$ 100,000
Operating Assets……………………………
$ 500,000
$ 300,000
$ 625,000
b.
The DuPont model provides an excellent basis of comparison between the three divisions
and illustrates the importance of managing both profit margin and turnover. Division X
combines the best margin and turnover to yield an ROI of 24%. Division Y is generating
E15.18.
(continued)
c.
If Division X were presented with an opportunity to bring on a new product line that
P15.19.
($5.00 - $4.95) * 7,400 pounds = $370 F
b.
Raw material usage variance:
($13.00 - $13.50 #) * 5,800 hours = $2,900 U
# Actual rate: $78,300 / 5,800 hours = $13.50
($6.00 - $6.15 #) * 5,800 hours = $870 U
# Actual rate: $35,670 / 5,800 hours = $6.15
f.
Variable overhead efficiency variance:
E15.19.
(continued)
Explanation of results: In order to create a favorable purchase price variance, the
purchasing manager may have purchased lower-than-standard quality raw material
P15.20.
($6.80 - ($80,940 / 11,400 pounds)) * 11,400 pounds =
($6.80 - $7.10) * 11,400 = $3,420 U
b.
Raw materials usage variance:
($14.00 - $14.35) * 4,420 hours = $1,547 U
d.
Direct labor efficiency variance:
(Standard hours - Actual hours) * Standard rate
e.
Variable overhead spending variance:
(Standard rate - Actual rate) * Actual hours
f.
Variable overhead efficiency variance:
E15.20.
(continued)
Variance Summary:
Total raw materials variance
$ 1,788 U
Total direct labor variance
413 F
Total variable overhead variance
312 F
Total variance
$ 1,063 U
Explanation of results: The unfavorable purchase price variance sometimes indicates
that higher-than-standard quality raw material inputs were purchased—and the
P15.21.
Simple
Complex
a.
Work hours per day ………………………………………….
7.5
7.5
Divided by: Standard processing time per claim (in hours) …
0.75
2.5
Standard number of claims processed (per day per worker)…
10.0
3.0
b.
Actual number of workers …………………………………………….
27
Standard number of workers required for the month ………………….
25
P15.22.
a.
Teller staffing analysis:
Number of customers per hour ...………………………………
50
Divided by: Standard number of customers per hour per teller..
12
Number of tellers required per hour, at standard ………………
4.17
b.
Teller staffing analysis:
11:00-1:00
Other hours
1 & 2
Average number of customers per hour……………
80
40
Standard customers served per teller per hour ……
12
12
Standard number of tellers required per hour
6.67
3.33
P15.23.
a.
Predetermined overhead application rate:
=
Activity Estimated
$ Overhead Estimated
=
hours) 5.0 * units 000,40(
000,36$
= $1.80 per machine hour
P15.24.
a.
Variable
Fixed
Original budget ………………………………………
$21,000
$32,000
Budgeted production, in units ……………………..…
15,000
Budget per unit ………………………………………
$ 1.40
not appropriate
(c & d)
Variable
Fixed
Original budget ………………………………………
$21,000
$32,000
Budgeted activity (direct labor hours) ………………
5,000
5,000
c.
Predetermined overhead application rate per hour …
$ 4.20
$ 6.40
Standard hours allowed………………………………
5,400
5,400
d.
Overhead applied ……………………………………
$22,680
$34,560
C15.25.
a.
Supplies are a variable expense. The supplies budget should be flexed (i.e., it should
be increased to provide funds for the additional 18 students above the number
anticipated when the original budget was established).
C15.26.
The gifts and grants budget should be flexed. In other words, it should be increased in
C15.27.
No. For example, management might be able to control results better if the labor
efficiency variance is reported daily, in hours. The labor rate variance might be
C15.28.
a.
Most Useful Least Useful
1,2 3 4 5,6 7,8
1 - Raw material usage variance
2 - Direct labor efficiency variance
3 - Raw material price variance
4 - Direct labor rate variance
