### How much of a difference should have been observed

Assignment Help Accounting Basics
##### Reference no: EM131933077

Problem

One of the variable production costs is the cost of steel. The standards for steel purchase prices and usage as set at the beginning of 2016 were: Standard price of steel \$25.00 per pound Standard quantity of steel per car 100 pounds per carData on actual steel purchases for 2016 were: Actual cost of steel purchased and used \$28,700,000 Actual pounds of steel purchase and used 1,210,000 pounds Recall that budgeted production for the year was 10,000 cars, while actual production was 11,000.

Required

1. Were total steel costs for 2016 greater or less than expected? By how much?

2. How much of a difference should have been observed due to the production level being higher than expected? How much difference is still unexplained?

3. The purchasing department is responsible for efficiently purchasing as much steel as the production department needs. What was the average price per pound at which steel was purchased? Did the purchasing department perform well?

4. The production department is responsible for efficiently using the steel to produce the necessary level of output. What was the average number of pounds of steel used to produce each car in 2016? Did the production department perform well?

5. At the end of the year a cash bonus of 5% of performance above expectations is split among the members of the relevant departments. Performance above expectations is defined in terms of impact on total profits. What was the impact of the production department's production activities on the company's overall profits? What was the impact of the purchasing department's activities on the company's overall profits? Which department if any will receive a bonus? What size will that bonus pool be?

6. Are there any caveats in the performance evaluation mechanism used in question 5?

### Write a Review

#### Focus on creativity and innovation

Select an organization that would benefit from a new focus on creativity and innovation.

#### Monroe company received the balance due

On March 6, Churchill Company returned \$120,000 of the merchandise purchased on March 2. The cost of the returned merchandise was \$90,000.

#### Assuming that the weighted average method

Assuming that the weighted-average method is used for determining the inventory cost, including repossessed merchandise, prepare schedules computing for 2010, 2011, and 2012:

#### Maximum possible efficiency of this plant

At a power plant that produces 1 GW (109 watts) of electricity, the steam turbines take in steam at a temperature of 500°C, and the waste heat is expelled into the environment at 20°C. (a) What is the maximum possible efficiency of this plant?

#### Record the change in selling price

A company \$100 million of fixed interest rate bonds payable at \$98 million. At year-end, the bonds were selling in the bond market at \$97 million. What entry would Moore Company make at year-end to record the change in selling price?

If a partner withdraws from a partnership and receives more cash than the amount recorded, what accounting does the business make of the excess payment

#### Gven the following data 2010 2009 net income 1740000

given the following data. 2010 2009 net income 1740000 1530000 stockholders equity 10650000 13760000 total assets

#### If overhead is applied on the basis of dlhs what

blaine corp. makes floats for mardi gras in new orleans. the companys fiscal year ends on march 31. on january 1 2010

#### Internal controls-payroll cycle

Please provide an explanation of the strengths and weaknesses of the internal controls related to the payroll cycle.

#### Early extinguishment of debt

Early extinguishment of debt.

#### Esteban appleby cpa is an assistant to controller of

esteban appleby cpa is an assistant to the controller of summerfield consulting co. in his spare time esteban also

#### Risen company a dealer in machinery and equipment leased

risen company a dealer in machinery and equipment leased equipment to foran inc. on july 1 2008. the lease is