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    Case Study 1

    Uploaded by

    Ahmad Waqas Dar
    This document contains a case study assignment submitted by Ahmad Waqas Dar to Ms. Qurat ul Ain on May 25, 2019. It includes answers to 5 questions related to variance analysis for a company that produced 180,000 units. The summary provides: 1) The break even point is calculated as 175,875 units. 2) A total cost, flexible budget, and variance analysis is presented comparing expected and actual costs. 3) A variance analysis is presented for direct material, labor, and fixed overhead spending variances. 4) Strategies are suggested for Wentao Chen to adapt for an iPhone 4 contract including outsourcing, increasing wages, implementing a salary for performance

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    Case Study 1

    Uploaded by

    Ahmad Waqas Dar
    48 views5 pages
    This document contains a case study assignment submitted by Ahmad Waqas Dar to Ms. Qurat ul Ain on May 25, 2019. It includes answers to 5 questions related to variance analysis for a company that produced 180,000 units. The summary provides: 1) The break even point is calculated as 175,875 units. 2) A total cost, flexible budget, and variance analysis is presented comparing expected and actual costs. 3) A variance analysis is presented for direct material, labor, and fixed overhead spending variances. 4) Strategies are suggested for Wentao Chen to adapt for an iPhone 4 contract including outsourcing, increasing wages, implementing a salary for performance

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    CASE STUDY 1.docx

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    This document contains a case study assignment submitted by Ahmad Waqas Dar to Ms. Qurat ul Ain on May 25, 2019. It includes answers to 5 questions related to variance analysis for a company that produced 180,000 units. The summary provides: 1) The break even point is calculated as 175,875 units. 2) A total cost, flexible budget, and variance analysis is presented comparing expected and actual costs. 3) A variance analysis is presented for direct material, labor, and fixed overhead spending variances. 4) Strategies are suggested for Wentao Chen to adapt for an iPhone 4 contract including outsourcing, increasing wages, implementing a salary for performance

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    48 views5 pages

    Case Study 1

    Uploaded by

    Ahmad Waqas Dar
    This document contains a case study assignment submitted by Ahmad Waqas Dar to Ms. Qurat ul Ain on May 25, 2019. It includes answers to 5 questions related to variance analysis for a company that produced 180,000 units. The summary provides: 1) The break even point is calculated as 175,875 units. 2) A total cost, flexible budget, and variance analysis is presented comparing expected and actual costs. 3) A variance analysis is presented for direct material, labor, and fixed overhead spending variances. 4) Strategies are suggested for Wentao Chen to adapt for an iPhone 4 contract including outsourcing, increasing wages, implementing a salary for performance

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    NUST Business School

    Course Title: IMA


    ASSIGNMENT # 1

    Submitted to;
    Ms.Qurat ul Ain
    Submitted by;

    Ahmad Waqas Dar

    Date:25th MAY 2019 BS ACF 2K17 B


    CASE STUDY 1

    Q-1

    ANS.

    Break Even Point


    Price per unit = revenue / unit

    = 41,240 / 200

    = 206.20

    Variable cost per unit = variable cost / unit

    = 40,411 / 200

    =202.055

    Contribution margin = price per unit – variable cost per unit

    = 206.20 – 202.055

    =4.145

    Break even point = fixed cost / contribution margin

    = 729 / 4.145

    =175.875 units

    Q-2

    ANS.

    TOTAL COST VARIANCE ANALYSIS


    Expected cost per unit = total cost / budgeted units

    = 41,140,000 / 200,000

    =$ 205.70
    Actual cost per unit = actual total cost / actual units

    = 38,148,000 / 180,000

    =$ 211.91

    Q-3

    ANS.

    (180,000 UNITS ) Flexible Budget Variance Performance

    Revenue 37116 360 F

    Variable costs :

    Materials :

    Flash memory 4860 389 A

    Application process 1935

    Chips 2529

    Gyroscope 468

    8 other chips 122771 ( 128) F

    Variable suppliesand tools 11257.20 47.80 A

    Subtotal 33820.20 308.80 A

    Labor :

    Assembly and packaging 2359.80 732.20 A

    Shipping 190.80 0.20 A

    Total variable costs 36370.80 1041.20 A

    Fixed costs :
    Factory rent 400

    Machine depreciation 150

    Utility fee and taxes 52

    Supervision total fixed costs 127 7 A

    Total fixed costs 729 7 A

    Total cost 37099.80 1048.20 A

    Net income $ 16.20 ( 688.20 ) A

    *compared it with actual data given in question

    Q-4

    ANS.

    VARIANCE ANALYSIS

    FLASH MEMORY
    Direct material price variance =(actual price – standard price ) x actual quantity

    =( 29.16 – 27 ) x 180,000

    = $ 388,800 A

    Direct material quantity variance = ( actual quantity – standard quantity ) x actual price

    = ( 180,000 – 200,000 ) x 29.16

    = $ 540,000 F

    Total Material variance = price variance – usage variance

    = 388,800 – 540,000

    = $ 151,200 F

    Labor
    Direct labour rate variance = ( actual rate – standard rate ) actual hour

    = ( 17.18 – 13.11 ) x 180,000

    = $ 732,600 A

    Direct labor efficiency variance = ( actual hour – standard hour ) x standard rate

    = ( 180,000 – 200,000 ) x 13.11

    = $ 262,200 F

    Total labor variance = labor variance – efficiency variance

    = 732,600 A – 262,200 F

    =$ 470,400 A

    Fixed overhead spending variance = actual fixed manufacturing oh – standard fixed manufacturing oh

    = 736,000 – 729,000

    = $ 7,000 A

    Q-5

    ANS .Wentao chen should adapt the following strategies for iphone 4 contract :
    1. Outsourcing
    2. Increment in wages
    3. Salary for performance policy
    4. Scheduling of overtime
    5. Trainings preferably short

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