TAE helped with a previous exam for this course (Order # 87673). The expert and I agreed on a time and then I opened it and sent the questions over the chat and they sent back solutions.
The previous exam had 20 questions so it is probably a similar amount. There is a 3.5 hour time limit once I start the exam (although last time the expert was done in 2 hours), and the breakdown is 70% quantitative and 30% qualitative. I have attached exam concepts and some examples of practice problems.
Concepts – iMSA503B Organizational architecture (components and inter-relationships) Spending variance Efficiency variance Activity variance Sales price variance Sales mix variance Sales activity / quantity variance Return on investment Residual income Strategic performance measurement system Balanced scorecard Performance measurement; issues; financial versus non-financial Subjective performance information Regression analysis Qualitative considerations underlying regression analysis Statistics (R-squared, t-statistics, p-value, etc.) Decision making under uncertainty Decision trees and specific components (decisions, states of nature, outcomes, probabilities) Probability types (marginal, joint, conditional) Value of imperfect information Value of perfect information 9 Question#6–TwoParts(15pointstotal) Part A The following standard costs per unit have been established by Fear, Inc.: Material (3 kilograms at $2 per kilogram) $ 6.00 Direct labor (2 hours at $12 per hour) 24.00 During the month, Fear produced 1,100 units, which was 100 more units than planned. They used 3,400 kilograms and 2,050 hours to do so. Total actual materials spending was $6,460, while total actual labor spending was $27,675. Required Choose EITHER materials OR labor, and compute the following variances: - Spending - Efficiency - Activity Be sure to denote each variance as favorable or unfavorable. 10 You only needed to pick materials OR labor. So, one of the following is required. If they provided both, we grade only the first one they provided. There may be some rounding issues; no points should be taken off if there are rounding differences. Materials Actual StPr Flexible Static 2.00 2.00 2.00 3.09091 3.00 3.00 1,100.00 1,100.00 1,000.00 6,460.00 6,800.00 6,600.00 6,000.00 340.00 (200.00) (600.00) Spending Efficiency Activity Labor Actual StPr Flexible Static 12.00 12.00 12.00 1.86 2.00 2.00 1,100.00 1,100.00 1,000.00 27,675.00 24,600.00 26,400.00 24,000.00 (3,075.00) 1,800.00 (2,400.00) Spending Efficiency Activity 9 points for this problem; 3 points for each variance. If there is an error that is central to a single item within the table that affects more than one variance, then you should only take off 3 points (maximum), as the alternative would be double- counting. For instance, if the actual input number is calculated incorrectly, then that affects both the spending and efficiency variances. Another example: the actual and standard volumes are reversed – this will affect every variance, but this type of error should not be “triple-counted” (i.e., take off 3 points). 11 Part B MarblesCompanysellstwoproducts–DeluxeandUltra. Thefollowinginformationwasgatheredaboutthetwoproducts: Deluxe Ultra Budgetedsalesinunits 3,200 800 Budgetedsellingprice(unit) $300 $850 Actualsalesinunits 3,500 1,500 Actualsellingprice(unit) $325 $840 Required CalculatethethreemainrevenuevariancesfortheDeluxeproduct. Besuretolabelthevariancesbyname,aswellas“favorable”or“unfavorable.” Ifthereisinsufficientinformationtocalculateanyofthevariances,pleasedenotethatclearly. Deluxe Actual Column2 Flexible Static 325.00 300.00 300.00 300.00 0.70 0.70 0.80 0.80 5,000.00 5,000.00 5,000.00 4,000.00 1,137,500.00 1,050,000.00 1,200,000.00 960,000.00 87,500.00 (150,000.00) 240,000.00 Salesprice Salesmix Salesvolume/activity/quantity Favorable Unfavorable Favorable 6pointsforthispartoftheproblem. 2pointsforeachvariance;1forthenumber,1forthelabelandfavorable/unfavorabledistinction. Materials and Manufacturing Labor Variances Consider the following selected data regarding the manufacture of a line of upholstered chairs: Standards Per Chair Direct materials 2 square yards of input at $10 per square yard Direct manufacturing labor 0.5 hour of input at $20 per hour The following data were compiled regarding actual performance: actual output units (chairs) produced, 20,000; square yards of input purchased and used, 37,000; price per square yard, $10.20; direct manufacturing labor costs, $176,400; actual hours of input, 9,000; labor price per hour, $19.60. Required: 1. Show your computations of spending and efficiency variances for direct materials. Give a plausible explanation of why the variances occurred. Materials spending variance: $7,400 U Materials efficiency variance: $30,000 F 2. Show your computations of price and efficiency variances for direct materials. Give a plausible explanation of why the variances occurred. Direct labor spending variance: $3,600 F Direct labor efficiency variance: $20,000 F Production Cost Variance Calculations The following standard costs per unit have been established by Baldwin Company: Material (6 pounds @ $.50 per pound) $ 3.00 Direct labor (1 hour @ $8 per hour) 8.00 Factory overhead (1 hour @ $5.50 per hour) 5.50 Total Standard Cost per Unit $16.50 The $5.50 per direct labor hour overhead rate is based on normal capacity of 95 percent of practical capacity. The following flexible budget information is provided: Operating Levels 85% 95% 100% Units of production 4,250 4,750 5,000 Standard direct labor hours 4,250 4,750 5,000 Variable factor overhead 8,500 9,500 10,000 Fixed factory overhead 16,625 16,625 16,625 During March the company operated at 85% capacity, producing 4,250 units of product which were charged with the following standard costs: Material (25,500 pounds @ $.50 per pound) $12,750 Direct labor (4,250 hours @ $8 per hour) 34,000 Factory overhead (4,250 hours @ $5.50 per hour) 23,375 Total Standard Cost $70,125 Actual costs incurred during March were: Material (26,100 pounds) $11,745 Direct labor (4,150 hours) 34,445 Fixed factory overhead costs 16,625 Variable factory overhead costs 7,650 Total Actual Costs $70,465 Assume all the direct material purchased was used during the period. Use the table on the following page to support your answers if you find it useful, or show your work in another clearly labeled format. a. Determine the following variances: Price Efficiency Activity direct material $1305 F $300 U $1500 F direct labor $1245 U $800 F $4000 F variable overhead $650 F $200 F $1000 F fixed overhead $0 X X Make sure you record a number in each blank space. Indicate "favorable" or "unfavorable" for each variance. Standard Costing Swan is a specialty chemical produced in batches. Normal denominator volume is 100 batches per week. The weekly flexible budget for indirect costs (i.e., overhead) is $1600 plus $5 per standard hour of direct labor. The company considers direct labor hours to be a reasonable cost driver in this scenario. Data for the week just ended are: (1) Production amounted to 103 batches (2) There were 315 hours of direct labor used, costing $2,472. (3) The standards allow 3 hours of direct labor per batch (4) Actual variable overhead for the week was $1,550 (5) Actual fixed overhead for the week was $3,700 Computations are shown first using tables, then formulas on the following page. Actual Activity Standard Input Flexible Budget Master Budget Overhead Applied Variable Overhead $1550 315x$5 = $1575 103x3x$5 = $1545 100x3x$5 = $1500 Same as flex budget under standard costing system $25 F activity efficiency spending $30 U $45 U $50 U Overall variable overhead variance Actual Activity Standard Input Flexible Budget Master Budget Overhead Applied Fixed Overhead $3700 NA NA $1600 103x ($1600/100) = $1648 a. Calculate the following variances: Variance Variable Overhead Fixed Overhead Price/Spending $25 F $2100 U Efficiency $30 U X Activity $45 U X Production Volume X $48 F Note that this problem shows a production volume variance – which we didn’t cover in class, so you are not responsible for that information. Variable overhead spending variance: $1550 – (315x $5) = $25 F Variable overhead efficiency variance: (315 – 3 x 103)x$5 = $30 U Variable overhead activity variance: (103 – 100) x (3 x$5) - $45 U $2100 U Fixed overhead budget variance Production volume variance (PVV) $48 F Fixed overhead budget variance: $3700 - $1600 = $2100 U (just actual minus budgeted) Fixed overhead production volume variance: (103 – 100) x ($1600/100) = $48 F (just budgeted minus applied) Illawarra Office Equipment The production report of Illawaarra Office Equipment for April 1999 included the following information pertaining to the manufacture of a line of tables: Direct Direct Manufacturing Materials Labor Budgeted spending $540,000 $360,000 Actual spending 672,000 396,000 Variance $132,000 U 36,000$ U Actual price per unit of input (bd. ft., hr.) $14 $18 Standard price per unit of input $12 $20 Standard inputs allow per unit of output 5 2 Actual units of input 48,000 22,000 Budgeted units of output (product) 9,000 9,000 Actual units of output (product) 10,000 10,000 1. How much of the Direct Material and Direct Labor Variances are due to (a) price changes, (b) usage efficiencies or inefficiencies, (c) activity level changes. Materials Price: $96,000 U Labor Price: $44,000 F Materials Efficiency: $24,000 F Labor Efficiency: $40,000 U Materials Activity: $60,000 U Labor Activity: $40,000 U 2. Give a plausible explanation for the performance. As we discussed in class, there exist a number of plausible explanations for each of the above variances. Performance Evaluation of Investment Centers When the Coronet Company formed three divisions a year ago, the president told the division managers that an annual bonus would be paid to the most profitable division. However, absolute division operating income as conventionally computed would not be used. Instead, the ranking would be affected by the relative investments in the three divisions. Options available include ROI and residual income, and variations of each. Investment can be measured using gross book value or net (of straight-line depreciation) book value. Each manager has now written a memorandum claiming entitlement to the bonus. The