A company reported a significant materials efficiency variance for the month of January. All of the following are possible explanations for this variance except:

Company X uses weighted average method of process costing and presented the following information:

• Direct material 1 (DM1) costs are added at the beginning of the process
• Direct material 2 (DM2) costs are added at 70% stage of production
• Conversion costs (CC) are added evenly during the process
• Inspection point is at 50% stage of production
• Normal spoilage is 10% of all good units that pass the inspection point

The company recorded the following data regarding cost per EUP (cost/EUP)

• cost/EUP DM1 = $12
• cost/EUP DM2 = $10
• cost/EUP CC = $15

What is the total cost of 1 good unit completed?

Company X reported the following monthly unit costs to manufacture and market a particular product.

• Direct materials $ 1,78
• Variable manufacturing labor $ 4,45
• Variable manufacturing overhead $ 4,87
• Fixed manufacturing overhead $ 2.00
• Variable selling costs $ 5,83
• Fixed selling costs$ 2.32

The company has the opportunity to buy the same product from an external supplier, at the same quality level. Fixed selling costs would be unaffected, but variable selling costs would be reduced by 30% upon acceptance of the proposal.

What is the maximum amount per unit that the company can pay the supplier, considering that they are not willing to decrease current operating income?

Please consider the following statements related to allocation of support department costs:

I.  T

he total amount allocated among departments

will differ in total depending on the cost allocation method used

II. A

mounts allocated to departments will most

likely differ depending on the cost allocation method used

III. The reciprocal allocation method 

allocates support-department costs to other

support departments and to operating departments in a sequential manner that

partially recognizes the mutual services provided among all support departments

IV. The

 direct method is simple for

managers to compute and understand relative to the reciprocal method

Which of the following is TRUE?

Which of the following statement is TRUE?

I. In a period of falling prices, Weighted Average process costing method (WA) will result in higher cost of goods sold as compared to FIFO process costing method

II. In a period of rising prices, WA process costing method will decrease tax payments as compared to FIFO process costing method

III. The operating income and the tax payment of a company are not affected by the method of process costing used by the company

Company X uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. The following management information is available:

• Sales: Actual 4217 units; Budget 6079 units
• Sales: Actual $ 227617;  Budget $ 345636
• Variable costs: Actual $ 136806; Budget $ 193528
• Fixed costs: Actual $ 332541; Budget $ 275418

The company's flexible budget variance for the period's variable costs is (favorable +; unfavorable -):

Pat is the CEO of Company X. Pat has to decide what bonuses to pay for last year's extraordinary performance. Find next the preliminary budget analysis provided by the internal control officer:

(only cost the company has is Direct Materials, which is measured in kg).

Pat decided to use the entire favourable level 0 variance of the contribution margin as a bonus to be distributed over 3 people:

·       Claire, which is director of sales, responsible for the volume of sales and the price charged on the market.

·       Greg, which is director of procurement, responsible for the price of purchased DM.

·       Olaf, which is director of production, responsible for the production costs.

Comment the following statement, explaining the underlying concept:

"We have already invested so much in the studies for this alternative that may as well go ahead with the construction of this particular building for our new factory, rather than going for another cheaper option."

What bonus should Claire get if she is responsible for the volume sold and the revenues generated?

In a process where the Inspection point is at 58% stage of production, the cost of normal spoilage is also allocated to the units in ending work-in-process (EWIP) inventory, in addition to completed units, if the units _________