B2112 (F2022) A4

School: Memorial University of Newfoundland - Course: BUSI 2100 - Subject: Accounting

BUSINESS2112—INTRODUCTORYMANAGERIALA CCOUNTING ASSIGNMENT4:DUEDECEMBER 2ND ,2022 Assignment 4 contains 3 cases. Please read each section carefully and answer the questions posed inthe "Required" sections. See the course syllabus for additional information regarding assignments. Case 1 Codera Inc. Inc. employs a standard costing system. The company has capacity to produce 900,000 units per year and applies overhead is applied on the basis of direct labour hours. The standard costing system allows two direct labour hours per unit produced. For 2022, the company budgeted variable overhead to be $4,680,000 and fixed overhead to be $4,050,000. Actual results for the year are as follows: Units produced920,000 Direct labour hours used1,995,000 Variable overhead$5,147,100 Fixed overhead$4,200,000 Required: (A) Compute the predetermined variable overhead rate (SVOR). (B) Compute the variable overhead spending variance and the variable overhead efficiency variance and indicate whether each variance is favourable or unfavourable. (C) Compute the predetermined fixed overhead rate (SFOR). (D) Compute the applied fixed overhead. [Note, you will need to compute and use the Standard Hours in your calculation.] (E) Compute the fixed overhead spending variance and the fixed overhead volume variance. (F) How do the variable overhead variances and the fixed overhead variances help managers (i.e., what do the variances tell us)?

Case 2 For 2022, Affinity Inc. budgeted the following: Variable costs of production Direct materials3 kg at $2.25 per kilogram Direct labour0.6 hours at $24.00 per hour Variable overhead0.6 hours at $3.20 per hour Fixed overhead Materials handling$14,960 Depreciation$7,040 Required: (A) Prepare a flexible budget for 6,000 units, 6,500 units, and 7,000 units. Case 3 Swiltzer Co. manufactures 168,000 units of a component each year that the company uses in the production of one of its product lines. Relevant manufacturing costs for those units are as follows: Direct materials$315,000 Direct labour$504,000 Variable overhead$189,000 Fixed overhead$252,000 Total costs$1,260,000 Recently, management at Swiltzer Co. has received an offer from a potential supplier that is willing to sell the components to Swiltzer Co. for $7.40 per unit. If Swiltzer Co. accepts the offer, management could rent the manufacturing space currently used manufacturing the component in-house for $189,000 per year.