# ACCOUNTING

#8

SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 7,000 of these meals using 1,430 direct labor-hours. The company paid these direct labor workers a total of \$14,658 for this work, or \$10.25 per hour.

According to the standard cost card for this meal, it should require 0.21 direct labor-hours at a cost of \$10 per hour.

(a)

What direct labor cost should have been incurred to prepare 7,000 meals? (Omit the “\$” sign in your response)

Direct labor cost

\$

(b)

How much does this differ from the actual direct labor cost? (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)

Total direct labor variance

\$

(Click to select)UNoneF

(C Break down the difference computed in Requirement 1 above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)

Labor rate variance

\$

(Click to select)UNoneF

Labor efficiency variance

\$

(Click to select)UFNone

#9

Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 37,000 helmets, using 22,940 kilograms of plastic. The plastic cost the company RM197,284. (The currency in Malaysia is the ringgit, which is denoted here by RM.)

According to the standard cost card, each helmet should require 0.54 kilograms of plastic, at a cost of RM9 per kilogram.

Requirement 1:

(a)

What cost for plastic should have been incurred to make 37,000 helmets? (Omit the “RM” sign in your response.)

Cost incurred

RM

(b)

How much greater or less is this than the cost that was incurred? (Omit the “RM” sign in your response.)

Standard cost is (Click to select)greaterless by RM than the actual cost incurred.

Requirement 2:

Break down the difference computed in Requirement 1 above into a materials price variance and a materials quantity variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “RM” sign in your response.)

Materials price variance

RM

(Click to select)UFNone

Materials quantity variance

RM

(Click to select)UNoneF

#10

Companhia Bradesco, S.A., of Brazil, an industrial supply store chain, has two divisions. The company’s contribution format income statement segmented by divisions for last year is given below (the currency in Brazil is the real, denoted here by R):

Division

Total Company

Plastics

Glass

Sales

R3,499,900

R2,001,000

R1,498,900

Variable expenses

1,714,051

960,480

753,571

Contribution margin

1,785,849

1,040,520

745,329

Traceable fixed expenses:

609,200

297,000

312,200

Depreciation

226,300

113,000

113,300

434,959

210,000

224,959

Total

1,270,459

620,000

650,459

Division segment margin

515,390

R420,520

R94,870

Common fixed expenses

387,000

Net operating income

R128,390

Top management doesn’t understand why the Glass Division has such a low segment margin when its sales are only 25 less than sales in the Plastics Division. Accordingly, management has directed that the Glass Division be further segmented into product lines. The following information is available on the product lines in the Glass Division:

Glass Division Product Lines

Flat Glass

Auto Glass

Specialty Glass

Sales

R503,000

701,900

294,000

Traceable fixed expenses:

R80,400

R112,400

R119,400

Depreciation

R24,900

R55,700

R32,700

R29,600

R35,100

R41,700

Variable expenses as a percentage of sales

65%

39%

52%

Analysis shows that R118,559 of the Glass Division’s administration expenses are common to the product lines.

Requirement 1:

Prepare a contribution format segmented income statement for the Glass Division with segments defined as product lines. (Negative amounts other than the expenses should be indicated by a minus sign. Omit the “R” sign in your response.)

Product Line

Glass

Division

Flat Glass

Auto Glass

Specialty Glass

Sales

R

R

R

R

Variable expenses

Contribution margin

Traceable fixed expenses:

Depreciation

Total

Product line segment margin

R

R

R

Common fixed expenses