Now that you have completed running some calculations for the cookie business in Unit VII, you will present your findings.The learning objectives of this project allow you to apply accounting concepts and standards to the creation of accounting information and reports.Using your final project from Unit VII as a guide, create an eight- to ten-slide PowerPoint presentation. In this presentation, you want to summarize what you found and discuss how you think these findings will help you make better business decisions. In addition, provide future recommendations for the cookie business based on your report findings.Your presentation slides should be somewhat simple (incomplete sentences, bullets, etc.) with appropriate graphics or images. You must add content to your presentation (completed sentences) through either the notes feature in PowerPoint or by creating a video of you presenting your presentation, uploading your video to YouTube, and sharing the link to your video on the first or second slide of your presentation.
1
10
Title of the Paper Goes Here
Student Name
Institution
ACC 5301 Management Applications of Accounting
Instructor
Date
Abstract
The contributing margin is used to compare the performance of different products and determine if they are profitable or not. It used in determining the products to put emphasis on and the product to do away with.
The present value is used to determine the current value of a future sum of money today at a specific rate of return. It is used to determine if an investment is worth investing.
Variance is used to determine the difference between standard and actual costs incurred in production. When the variance is unfavorable, the cost of production is higher than the standard cost while when the variance is favorable, the cost of production is lower than the standard cost.
Cookie Business Final Project
Contribution margin is the difference between revenue and variable costs (sales revenue- variable costs) this takes into account the net income which is obtained from net sales, variable costs, and fixed costs (Gutiérrez, 2021). The break-even point is the number of units the business needs to sell to cover fixed cost. The weighted average contribution margin is the average amount that a group of products contribute to paying the fixed costs of a business.
The variance in production is used to determine the deviation of cost incurred of production from the standard cost. This is important in developing ways to improve production and reducing wastage.
Material price variance is the difference between the standard price and the actual price for the actual quantity of material used in production. The material price variance is favorable when the standard material cost is higher than the actual material cost.
Part 1 Contribution Margin/Breakeven
Cookie Business
Chocolate Chip
Sugar
Specialty
Total
Units Sold
1,500,000
980,000
300,000
2,780,000
Sales
$ 1,875,000.00
$ 882,000.00
$ 1,050,000.00
$ 3,807,000.00
Less: Variable Costs
$ 690,000.00
$ 205,800.00
$ 81,000.00
$ 976,800.00
Contribution Margin
$ 1,185,000.00
$ 676,200.00
$ 969,000.00
$ 2,830,200.00
Less: Common Fixed Costs
$ 125,000.00
Profit
$ 2,705,200.00
Per item Contribution Margin
0.79
0.69
3.23
Weighted Average Contribution Margin
1.018
Break-even point in units
959,474
Data in business is used to make decisions. The number of sales made determine the demand while contribution margin determines if a product is profitable which is easily calculated using the contribution margin formula. Diversification is important in business although having products that does not generate cash flow can lead the business to bankruptcy. This makes contribution margin important. Products with low contribution margin means they are not performing well and the business owner can remove it from the production line. The business owner can also decide to promote another product that is generating a high contribution margin.
Contribution margin= net sales- variable cost
Contribution margin per unit= (net sales-variable cost)/number of units sold.
Per unit contribution margin helps to compare the different products where in our case specialty has the highest contribution margin then chocolate chips and lastly sugar meaning specialty generates the highest profit and then chocolate chips while sugar generates the least profit.
The weighted average contribution margin is the average amount that a group of products contribute to paying the fixed costs of a business. This is used in breakeven analysis.
Weighted average contribution margin= total of (contribution margin for each product*number of units sold)/total number of unit sales.
The products had a weighted average contribution margin above one which means the business is profitable and is paying the fixed costs.
The break-even point is the number of units the business needs to sell to cover fixed cost as explained by Gutierrez, & Dalsted, (1990). Which failure to cover them the business results in negative net profit and negative contribution margin.
Break-even point= fixed costs/per-unit contribution margin
The company break-even point is 959474 units.
Part 2 Full and Variable Costing
Cookie Business
Productions Costs:
Direct material
$ 0.60
Direct labor
$ 1.00
Variable manufacturing overhead
$ 0.40
Total variable manufacturing costs per unit
$ 2.00
Fixed manufacturing overhead per year
$ 139,000.00
In addition, the company has fixed selling and administrative costs:
Fixed selling costs per year
$ 50,000.00
Fixed administrative costs per year
$ 65,000.00
Selling price per cookie
$ 3.75
Number of cookies produced
2,780,000
Number of cookies sold
2,600,000
Full (absorption) costing :
Full cost per unit
$ 2.09
Ending Inventory Full (absorption) costing
$ 376,446
Variable costing :
Variable cost per unit
$ 2.00
Ending Inventory Variable costing
$ 360,000
Absorption costing is used in inventory valuation and calculating the cost of the product in companies where all the expenses incurred by the company are taken into consideration. The full absorption costing is obtained by adding up all the costs incurred in the production process and allocating them to the products individually as stated by Nawaz, (2013).
Full absorption cost =direct labor cost per unit+direct material cost per unit+variable manufacturing overhead cost per unit+fixed manufacturing overhead per unit.
This gives the total cost of producing each product.
The ending inventory full absorption costing is the number of goods left as inventory in the company multiplied with the full absorption cost per unit.
The variable cost per unit only considers the variable cost of production which include direct labor cost per unit, direct material cost per unit and variable manufacturing overhead cost per unit.
This cost is used in determining the per unit cost of production and amount of inventory cost left at the end of a period.
Part 3 Special Order
Cookie Business
Number of cookies needed
1,000
Discounted price per cookie
$ 2.75
Normal price per cookie
$ 3.75
Cost of special printed design per cookie
$ 0.50
Cost of tool needed to make the design
$ 100.00
Revenue for special order
$ 2,750
Costs for special order:
Design cost
$ 600
Tool cost
$ 2,691
Net increase (decrease) in profit
$ 59
The special order has a cost of production of $2.09 with an additional cost of design which makes the cost of production of the 1000 products to be $2691. The net revenue from sales of the 1000 product is $2750 after discount which makes the profit to be $59 from sales of the 1000 products.
Part 4 Internal Rate of Return
Cookie Business
As the owner of the Cookie Business, you are considering the following investment:
Purchase of new equipment
$ 250,000.00
Expected annual increase in sales
$ 48,017.50
Time frame
7
years
Acceptable rate needed
9%
Calculate the Internal Rate of Return:
PV of annuity factor
-8116.6455
Internal rate of return
5%
5.206435
Accept or reject
accept
The internal rate of return is a discount rate used to identify potential future investments that will be profitable. It is used to make the present value of an investment to zero. This shows the percentage return from the investment required for it to break even when adjusted for the value of time and money involved as explained by Bora, (2015). This gives the minimum acceptable return on investment. With a rate of 9 percent for 7 years the investment PV is a negative which shows that it has not yet completed paying back the amount invested.
The IRR is found to be 5% taking the time frame to be 5 years. This will ensure that the amount invested have been recovered from the profit obtained.
The transaction is biased as one of the partners is pushing for the equipment purchase with other agenda apart from one of increasing the company production. The partner wishes to promote his brother’s business. This is unethical as it will lead to purchase of the equipment with unnecessary urgency which resulted from provision of false data and information. There may be another alternative better than purchasing the equipment which might be foregone in the process of the partner promoting his brother’s business.
Part 5 Cash Budget
The budgeted credit sales are as follows:
December last year
$ 250,000
January
$ 125,000
February
$ 300,000
March
$ 90,000
Collection:
Month of the sale
80%
Month following the sale
20%
Estimated cash receipts
January
February
March
Last month’s sales
$ 50,000
$ 25,000
$ 60,000
Current month’s sales
$ 100,000
$ 240,000
$ 72,000
Total
$ 150,000
$ 265,000
$ 132,000
February has the highest sale and cash flow as well as having the highest credit sales. The higher the credit sales the higher the amount of cash flow that result in the company in the same month. When the previous month has high credit sale, this means that the current year sales will be boosted.
Part 6 Material and Labor Variance
Cookie Business
Actual Cost of Direct Materials
$ 225,000
Standard Cost of Direct Materials
$ 224,800
Actual Materials Used
30
Standard Materials Used
31
Actual Direct Labor Rate
$ 15.50
Standard Labor Rate
$ 15.00
Actual Hours Worked
45
Standard Hours Worked
40
Amount
Favorable/ Unfavorable
Calculate Materials Variances:
Materials Price Variance
$ (6,000)
unfavorable
Materials Quantity Variance
$ 224,800
favorable
Calculate Labor Variances:
Labor Rate Variance
$ (23)
unfavorable
Labor Efficiency Variance
$ (75)
unfavorable
The material price variance is the difference between the standard price and the actual price for the actual quantity of materials used for production. Material price variance results form price changes, poor purchasing procedures and deficiencies in price negotiation.
Material price variance= (standard price-actual price) *actual quantity
The project had a material price variance of a negative value which means it was unfavorable as more cost was incurred than the standard cost.
The material quantity variance was a positive value which is favorable as less material was used than the standard.
The labor rate variance was unfavorable as it had a negative value. the rate for labor was higher than the standard value. The labor efficiency variance was unfavorable as the actual hours worked were more than the standard hours of work. When the labor and price variance is unfavorable, the cost of production is higher than the standard and expected cost which means less profit.
Conclusions and Recommendations
The company deals with production of chocolate chip, sugar and specialty.
Variance is used to determine if the production process is operating at a cost higher than the standard cost or lower or operating at the standard cost. When the variance is unfavorable there is less profit earned as the cost of production is higher while when the variance is favorable, there is more profit as less cost is incurred in production.
The management team should focus in maintaining the material price variance, quantity variance, the labor rate and efficiency favorable so as to reduce the cost of production.
References
Bora, B. (2015). Comparison between net present value and internal rate of return. International journal of research in finance and marketing, 5(12), 61-71.
https://www.academia.edu/download/41051869/comparison_between_NPV_and_IRR
Gutiérrez, M. (2021). Making better decisions by applying mathematical optimization to cost accounting: An advanced approach to multi-level contribution margin accounting. Heliyon, 7(2), e06096.
https://www.sciencedirect.com/science/article/pii/S2405844021002012
Gutierrez, P. H., & Dalsted, N. L. (1990). Break-even method of investment analysis (Doctoral dissertation, Colorado State University. Libraries).
https://www.extension.colostate.edu/docs/pubs/farmmgt/03759
Nawaz, M. (2013). An Insight Into the Two Costing Technique: Absorption Costing and Marginal Costing. BRAND. Broad Research in Accounting, Negotiation, and Distribution, 4(1), 48-61.
https://brain.edusoft.ro/index.php/brand/article/view/382
>CM Breakeve , 00,000
0,000
00,000
80,000
90,000.00
.00
,200.00
5,000.00
74
9,000.00
.00
2,780,000 $ 2.00 1,000 $ 3.75 0.00
.00
n 1 7 2 3 21
5 18
6.6455
6 5% 351539
7 5.2064 9 $ 250,000 $ 50,000 30 31 45 40 $ 224,800 favorable unfavorable unfavorable 2
Abstract
The contributing margin is used to compare the performance of different products and
determine if they are profitable or not. It used in determining the products to put emphasis on
and the product to do away with. The present value is used to determine the current value of a
future sum of money today at a specific rate of return. It is used to determine if an investment is
worth investing. Variance is used to determine the difference between standard and actual costs
incurred in production. When the variance is unfavorable, the cost of production is higher than
the standard cost while when the variance is favorable, the cost of production is lower than the
standard cost. 3
Cookie Business Final Project
Contribution margin is the difference between revenue and variable costs (sales
revenue- variable costs) this takes into account the net income which is obtained from net sales,
variable costs, and fixed costs (Gutiérrez, 2021). The break-even point is the number of units the
business needs to sell to cover fixed cost. The weighted average contribution margin is the
average amount that a group of products contribute to paying the fixed costs of a business. The
variance in production is used to determine the deviation of cost incurred of production from
the standard cost. This is important in developing ways to improve production and reducing
wastage.
Material price variance is the difference between the standard price and the actual price
for the actual quantity of material used in production. The material price variance is favorable
when the standard material cost is higher than the actual material cost.
Part 1 Contribution Margin/Breakeven
Cookie Business Chocolate Chip Sugar Specialty Total
Units Sold 1,500,000 980,000 300,000 2,780,000 Per item Contribution Margin 0.79 0.69 3.23 Weighted Average
1.018
Break-even point in units 959,474 4
Data in business is used to make decisions. The number of sales made determine the
demand while contribution margin determines if a product is profitable which is easily
calculated using the contribution margin formula. Diversification is important in business
although having products that does not generate cash flow can lead the business to bankruptcy.
This makes contribution margin important. Products with low contribution margin means they
are not performing well and the business owner can remove it from the production line. The
business owner can also decide to promote another product that is generating a high
contribution margin.
Contribution margin = net sales- variable cost
Contribution margin per unit= (net sales-variable cost)/number of units sold.
Per unit contribution margin helps to compare the different products where in our case
specialty has the highest contribution margin then chocolate chips and lastly sugar meaning
specialty generates the highest profit and then chocolate chips while sugar generates the least
profit. The weighted average contribution margin is the average amount that a group of
products contribute to paying the fixed costs of a business. This is used in breakeven analysis.
Weighted average contribution margin= total of (contribution margin for each product*number
of units sold)/total number of unit sales.
The products had a weighted average contribution margin above one which means the
business is profitable and is paying the fixed costs. The break-even point is the number of units
the business needs to sell to cover fixed cost as explained by Gutierrez, & Dalsted, (1990). Which
failure to cover them the business results in negative net profit and negative contribution
margin. Break-even point= fixed costs/per-unit contribution margin. The company break-even
point is 959,474 units. 5
Part 2 Full and Variable Costing
Cookie Business Productions Costs: Total variable manufacturing costs per unit $ 2.00 Fixed manufacturing overhead per year $ 139,000.00 In addition, the company has fixed selling and administrative Fixed selling costs per year $ 50,000.00
Fixed administrative costs per year $ 65,000.00 Selling price per cookie $ 3.75 Number of cookies produced 2,780,000 Full (absorption) costing : Variable costing : Absorption costing is used in inventory valuation and calculating the cost of the product
in companies where all the expenses incurred by the company are taken into consideration. The
full absorption costing is obtained by adding up all the costs incurred in the production process
and allocating them to the products individually as stated by Nawaz, (2013).
Full absorption cost = direct labor cost per unit+direct material cost per unit+variable
manufacturing overhead cost per unit+fixed manufacturing overhead per unit. This gives the
total cost of producing each product. The ending inventory full absorption costing is the 6
number of goods left as inventory in the company multiplied with the full absorption cost per
unit.
The variable cost per unit only considers the variable cost of production which include
direct labor cost per unit, direct material cost per unit and variable manufacturing overhead cost
per unit. This cost is used in determining the per unit cost of production and amount of
inventory cost left at the end of a period.
Part 3 Special Order
Cookie Business Number of cookies needed 1,000 Revenue for special order $ 2,750 Tool cost $ 2,691 The special order has a cost of production of $2.09 with an additional cost of design
which makes the cost of production of the 1,000 products to be $2,691. The net revenue from
sales of the 1,000 product is $2,750 after discount which makes the profit to be $59 from sales
of the 1,000 products.
Part 4 Internal Rate of Return
Cookie Business
7
As the owner of the Cookie Business, you are considering the Purchase of new equipment $ 250,000.00 Calculate the Internal Rate of Return: Accept or reject Accept
The internal rate of return is a discount rate used to identify potential future investments
that will be profitable. It is used to make the present value of an investment to zero. This shows
the percentage return from the investment required for it to break even when adjusted for the
value of time and money involved as explained by Bora, (2015). This gives the minimum
acceptable return on investment. With a rate of 9 percent for 7 years the investment PV is a
negative which shows that it has not yet completed paying back the amount invested.
The IRR is found to be 5% taking the time frame to be 5 years. This will ensure that the
amount invested have been recovered from the profit obtained.
The transaction is biased as one of the partners is pushing for the equipment purchase
with other agenda apart from one of increasing the company production. The partner wishes to
promote his brother’s business. This is unethical as it will lead to purchase of the equipment
with unnecessary urgency which resulted from provision of false data and information. There
may be another alternative better than purchasing the equipment which might be foregone in
the process of the partner promoting his brother’s business.
Part 5 Cash Budget 8
The budgeted credit sales 9
December last year $ 250,000 Collection: Estimated cash receipts February has the highest sale and cash flow as well as having the highest credit sales.
The higher the credit sales the higher the amount of cash flow that result in the company in the
same month. When the previous month has high credit sale, this means that the current year
sales will be boosted.
Part 6 Material and Labor Variance
Cookie Business Actual Cost of Direct Materials $ 225,000 Actual Direct Labor Rate $ 15.50 Amount
Favorable/ Calculate Materials Variances: 10
Materials Price Variance $ (6,000) Unfavorable
Calculate Labor Variances:
Labor Rate Variance $ (23) Unfavorable The material price variance is the difference between the standard price and the actual
price for the actual quantity of materials used for production. Material price variance results
from price changes, poor purchasing procedures and deficiencies in price negotiation.
Material price variance= (standard price-actual price) *actual quantity
The project had a material price variance of a negative value which means it was
unfavorable as more cost was incurred than the standard cost. The material quantity variance
was a positive value which is favorable as less material was used than the standard. The labor
rate variance was unfavorable as it had a negative value. The rate for labor was higher than the
standard value. The labor efficiency variance was unfavorable as the actual hours worked were
more than the standard hours of work. When the labor and price variance is unfavorable, the
cost of production is higher than the standard and expected cost which means less profit.
Conclusions and Recommendations
The company deals with production of chocolate chip, sugar and specialty. Variance is
used to determine if the production process is operating at a cost higher than the standard cost
or lower or operating at the standard cost. When the variance is unfavorable there is less profit
earned as the cost of production is higher while when the variance is favorable, there is more
profit as less cost is incurred in production. The management team should focus in maintaining
the material price variance, quantity variance, the labor rate and efficiency favorable so as to
reduce the cost of production. 11
References
Bora, B. (2015). Comparison between net present value and internal rate of return. International journal of
research in finance and marketing, 5(12), 61-71.
https://www.academia.edu/download/41051869/comparison_between_NPV_and_IRR
Gutiérrez, M. (2021). Making better decisions by applying mathematical optimization to cost accounting: An
advanced approach to multi-level contribution margin accounting. Heliyon, 7(2), e06096.
https://www.sciencedirect.com/science/article/pii/S2405844021002012
Gutierrez, P. H., & Dalsted, N. L. (1990). Break-even method of investment analysis (Doctoral dissertation,
Colorado State University. Libraries). https://www.extension.colostate.edu/docs/pubs/farmmgt/03759
Nawaz, M. (2013). An Insight Into the Two Costing Technique: Absorption Costing and Marginal
Costing. BRAND. Broad Research in Accounting, Negotiation, and Distribution, 4(1), 48-61.
https://brain.edusoft.ro/index.php/brand/article/view/382n
Cookie Business
Chocolate Chip
Sugar
Specialty
Total
Units Sold
1
5
9
8
3
2,
7
Sales
$ 1,875,000.00
$ 882,000.00
$ 1,050,000.00
$ 3,807,000.00
Less: Variable Costs
$
6
$ 205,800.00
$ 8
1,000
$ 976,800.00
Contribution Margin
$ 1,185,000.00
$ 676,200.00
$ 969,000.00
$ 2,8
30
Less: Common Fixed Costs
$
12
Profit
$ 2,705,200.00
Per item Contribution Margin
0.79
0.69
3.23
Weighted Average Contribution Margin
1.018
Break-even point in units
959,
4
Full Variable
Cookie Business
Productions Costs:
Direct material
$ 0.60
Direct labor
$ 1.00
Variable manufacturing overhead
$ 0.
40
Total variable manufacturing costs per unit
$ 2.00
Fixed manufacturing overhead per year
$
13
In addition, the company has fixed selling and administrative costs:
Fixed selling costs per year
$ 50,000
Fixed administrative costs per year
$ 65,000.00
Selling price per cookie
$ 3.75
Number of cookies produced
Number of cookies sold
2,600,000
Full (absorption) costing :
Full cost per unit
$ 2.09
Ending Inventory Full (absorption) costing
$ 376,446
Variable costing :
Variable cost per unit
Ending Inventory Variable costing
$ 360,000
Special Order
Cookie Business
Number of cookies needed
Discounted price per cookie
$ 2.75
Normal price per cookie
Cost of special printed design per cookie
$ 0.50
Cost of tool needed to make the design
$
10
Revenue for special order
$ 2,750
Costs for special order:
Design cost
$ 600
Tool cost
$ 2,691
Net increase (decrease) in profit
$ 59
IRR
Cookie Business
As the owner of the Cookie Business, you are considering the following investment:
PV of Annuity Table
Purchase of new equipment
$ 250,000
1%
2%
3%
4%
5%
6%
8%
10%
12%
Expected annual increase in sales
$ 48,017.50
0.9901
0.9804
0.9709
0.96
15
0.9524
0.9434
0.9259
0.9091
0.8929
Time frame
years
1.9704
1.9416
1.9135
1.8861
1.8594
1.8334
1.7833
1.7355
1.6906
Acceptable rate needed
9%
2.941
2.8839
2.8286
2.7751
2.7233
2.673
2.5771
2.4869
2.4018
4
3.902
3.8077
3.7171
3.6299
3.546
3.4651
3.
31
3.1699
3.0374
Calculate the Internal Rate of Return:
4.8534
4.7135
4.5797
4.
45
4.3295
4.2124
3.9927
3.7908
3.6048
PV of annuity factor
-8
11
5.7955
5.60
14
5.4172
5.2421
5.0757
4.9173
4.6229
4.3553
4.1114
Internal rate of return
5.2064
6.7282
6.472
6.2303
6.0021
5.7864
5.5824
4.8684
4.5638
8
7.6517
7.3255
7.0197
6.7327
6.4632
6.2098
5.7466
5.3349
4.9676
Accept or reject
accept
8.566
8.1622
7.7861
7.4353
7.1078
6.8017
6.2469
5.759
5.3283
10
9.4713
8.9826
8.5302
8.1109
7.7217
7.3601
6.7101
6.1446
5.6502
11
10.3676
9.7869
9.2526
8.7605
8.3064
7.8869
7.139
6.4951
5.9377
12
11.2551
10.5753
9.954
9.3851
8.8633
8.3838
7.5361
6.8137
6.1944
13
12.1337
11.3484
10.635
9.9857
9.3936
8.8527
7.9038
7.1034
6.4236
14
13.0037
12.1063
11.2961
10.5631
9.8986
9.295
8.2442
7.3667
6.6282
15
13.8651
12.8493
11.938
11.1184
10.3797
9.7123
8.5595
7.6061
6.8109
Cash Budget
Cookie Business
The budgeted credit sales are as follows:
December last year
January
$ 125,000
February
$ 300,000
March
$ 90,000
Collection:
Month of the sale
80%
Month following the sale
20%
Estimated cash receipts
January February March
Last month’s sales
$ 25,000
$ 60,000
Current month’s sales
$ 100,000
$ 240,000
$ 72,000
Total
$ 150,000
$ 265,000
$ 132,000
Variances
Cookie Business
Actual Cost of Direct Materials
$ 225,000
Standard Cost of Direct Materials
$ 224,800
Actual Materials Used
Standard Materials Used
Actual Direct Labor Rate
$ 15.50
Standard Labor Rate
$ 15.00
Actual Hours Worked
Standard Hours Worked
Amount
Favorable/ Un
favorable
Calculate Materials Variances:
Materials Price Variance
$ (6,000)
unfavorable
Materials Quantity Variance
Calculate Labor Variances:
Labor Rate Variance
$ (23)
Labor Efficiency Variance
$ (75)
Sales $ 1,875,000.00 $ 882,000.00 $ 1,050,000.00 $ 3,807,000.00
Less: Variable Costs $ 690,000.00 $ 205,800.00 $ 81,000.00 $ 976,800.00
Contribution Margin $ 1,185,000.00 $ 676,200.00 $ 969,000.00 $ 2,830,200.00
Less: Common Fixed Costs $ 125,000.00
Profit $ 2,705,200.00
Contribution Margin
Direct material $ 0.60
Direct labor $ 1.00
Variable manufacturing overhead $ 0.40
costs:
Number of cookies sold 2,600,000
Full cost per unit $ 2.09
Ending Inventory Full (absorption) costing $ 376,446
Variable cost per unit $ 2.00
Ending Inventory Variable costing $ 360,000
Discounted price per cookie $ 2.75
Normal price per cookie $ 3.75
Cost of special printed design per cookie $ 0.50
Cost of tool needed to make the design $ 100.00
Costs for special order:
Design cost $ 600
Net increase (decrease) in profit $ 59
following investment:
Expected annual increase in sales $ 48,017.50
Time frame 7 years
Acceptable rate needed 9%
PV of annuity factor -8116.6455
Internal rate of return 5% 5.206435
are as follows:
January $ 125,000
February $ 300,000
March $ 90,000
Month of the sale 80%
Month following the sale 20%
January February March
Last month’s sales $ 50,000 $ 25,000 $ 60,000
Current month’s sales $ 100,000 $ 240,000 $ 72,000
Total $ 150,000 $ 265,000 $ 132,000
Standard Cost of Direct Materials $ 224,800
Actual Materials Used 30
Standard Materials Used 31
Standard Labor Rate $ 15.00
Actual Hours Worked 45
Standard Hours Worked 40
Unfavorabl
e
Materials Quantity Variance $ 224,800 Favorable
Labor Efficiency Variance $ (75) Unfavorable