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ACCT 3122 Fall 2020 Test 1 Question 3 (35 Marks) Ahmed Manufacturing LLC manufactures Product Q. In the previous month of September 2020, the company budgeted to manufacture and sell 3,000 Product Q at a variable cost of OMR47 per unit and total fixed costs of OMR54,000. The budgeted selling price per unit was OMR110. Actual results in that month were 2,800 units manufactured and sold at a selling price per unit of OMR112. The actual total variable costs were OMR229,600 and the actual total fixed costs incurred were OMR55,000 (a) Prepare a budgeted income statement based on the above information by clearly (10 Marks) showing (for each item in the income statement the Actual Results Static Budget amount Flexible Budget amount (M) Static Budget variances: W Flexible Budget variances: (vi) Sales Volume variances; Ahmed Manufacturing LLC manufactures Product Q. The following data are available. OM Standardunit 10 B, 3 OMR45001 Bl. [Standardunt 0.5 hours at OMR30hour] Budgeted finished units Budgeted units actual produced Actual DM used 90855 Actual DL hours used 4900 Machine Hours (MHS) (Actual 9.900 Machine Hours Budgeted 9.600 Variable Overhead per MH (Actual) Variable Overhead per MH Budgeted Total Actual DL Coss OMR153,450 Cost of DM purchased (Oy 110,000 b) OMR465,000 Note: DM: Direct Materials and DL: Direct Labor (0) Compute the price and efficiency variances for both items of DM and DL (15 Marks) Compute the Variable Overhead Spending and Efficiency Variance Unrelated to the question above, compute the Foxed Overhead Spending and Production Volume Variance assuming that the yearly data for the total actual fixed overhead cost is OMR25,000 lower than the budgeted amount of OMR700,000 and budgeted production is 54,000 units higher than the actual production of 504,000. (c) Discuss the possible reasons for an unfavorable direct manufacturing labor efficiency (3 Marks) variance Explain how Variance analysis could form the basis of continuous operational (3 Marks) improvement in Ahmed Manufacturing LLC Explain why you would disagree that FAVORABLE status of the Variable Overhead (4 Marks) Spending Variance is always desirable. *** END OF QUESTION PAPER *** OMR45 10.000 OMR15 9.850 5.00 525 ACCT 3122 Fall 2020 Test 1 Question 3 (35 Marks) Ahmed Manufacturing LLC manufactures Product Q. In the previous month of September 2020, the company budgeted to manufacture and sell 3,000 Product Q at a variable cost of OMR47 per unit and total fixed costs of OMR54,000. The budgeted selling price per unit was OMR110. Actual results in that month were 2,800 units manufactured and sold at a selling price per unit of OMR112. The actual total variable costs were OMR229,600 and the actual total fixed costs incurred were OMR55,000 (a) Prepare a budgeted income statement based on the above information by clearly (10 Marks) showing (for each item in the income statement the Actual Results Static Budget amount Flexible Budget amount (M) Static Budget variances: W Flexible Budget variances: (vi) Sales Volume variances; Ahmed Manufacturing LLC manufactures Product Q. The following data are available. OM Standardunit 10 B, 3 OMR45001 Bl. [Standardunt 0.5 hours at OMR30hour] Budgeted finished units Budgeted units actual produced Actual DM used 90855 Actual DL hours used 4900 Machine Hours (MHS) (Actual 9.900 Machine Hours Budgeted 9.600 Variable Overhead per MH (Actual) Variable Overhead per MH Budgeted Total Actual DL Coss OMR153,450 Cost of DM purchased (Oy 110,000 b) OMR465,000 Note: DM: Direct Materials and DL: Direct Labor (0) Compute the price and efficiency variances for both items of DM and DL (15 Marks) Compute the Variable Overhead Spending and Efficiency Variance Unrelated to the question above, compute the Foxed Overhead Spending and Production Volume Variance assuming that the yearly data for the total actual fixed overhead cost is OMR25,000 lower than the budgeted amount of OMR700,000 and budgeted production is 54,000 units higher than the actual production of 504,000. (c) Discuss the possible reasons for an unfavorable direct manufacturing labor efficiency (3 Marks) variance Explain how Variance analysis could form the basis of continuous operational (3 Marks) improvement in Ahmed Manufacturing LLC Explain why you would disagree that FAVORABLE status of the Variable Overhead (4 Marks) Spending Variance is always desirable. *** END OF QUESTION PAPER *** OMR45 10.000 OMR15 9.850 5.00 525

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