CASE # 53

1:- THE BREAK-EVEN POINT IS 16,900 PATIENT-DAYS CALCULATED AS FOLLOWS:

COMPUTATION OF BREAK -EVEN POINT

IN PATIENT DAYS : PEDIATRICS
FOR THE YEAR ENDED JUNE 30,2002

TOTAL FIXED COSTS:

MEDICAL CENTER CHARGES.

SUPERVISING NURSES. ($25,000X4)
NURSES. ($20,000X10)
AIDS. (9,000X20)

TOTAL FIXED COSTS.

CONTRIBUTION MARGIN PER PATIENT-DAY:

VARIABLE COST PER PATIENT DAY:

($6,000,000 / $300= 20,000 PATIENT-DAYS)

($2,000,000 / $ 20,000 PATIENT-DAYS)

BREAK-EVEN POINT = TOTAL FIXED COSTS

IN PATIENT-DAYS. CONTRIBUTION MARGIN PER PATIENT

2:- NET EARNING WOULD DECREASE BY $606,660 CALCULATED AS FOLLOWS.

 COMPUTATION OF LOSS FROM RENTAL
OF ADDITIONAL 20 BEDS: PEDIATRICS
FOR THE YEAR ENDED JUNE 30.2002.

INCREASE IN REVENUE.

(20 ADDITIONAL BEDS X90 DAYS X $300 CHARGE PER DAY.

INCREASE IN EXPENSES.

(20 ADDITIONAL BEDS X90 DAYS X $100 CHARGE PER DAY.

FIXED CHARGES BY MEDICAL CENTER.

( $2,900,000 / 60 BEDS = $48,333 PER DAY,ROUNDED).

($48,333 X 20 BEDS)

SALARIES.

(20,000 PATIENT-DAYS BEFORE ADDITIONAL 20 BEDS + ADDITIONAL

BED X 90 DAYS = 21,800,WHICH DOES NOT EXCEED 22,000 PATIENT-DAYS;
THERE FOR NO ADDITIONAL PERSONNEL ARE REQUIRED)

TOTAL INCREASE IN EXPENSES

NET CHANGE IN EARNINGS FROM RENTAL OF ADDITIONAL 20 BEDS

CASE # 62

1 EUPOPEAN STYLES,INC
DIRECT-MATERIAL AND DIRECT-LABOUR VARIANCES
FOR NOVEMBER

LOT NO.

22 23

DIRECT-MATERIAL QUANTITY
VARIANCE:

STANDARD YARDS:

BOXES IN LOT 1,000 1,700

STANDARD YARDS:
PER BOX 24 24
 TOTAL STANDARD
QUANTITY 24,000 40,800

ACTUAL YARDS USED 24,100 40,440

VARIANCE IN YARDS 100 (360)

STANDARD PRICE $ 1.10 1.10

DIRECT-MATERIAL

QUANTITY VARIANCE $ 110 (396)

2 LOT NO.

22 23

DIRECT-LABOR EFFICIENCY VARIANCE:

STANDARD HOURS:
BOX IN LOT 1,000 1,700

STANDARD HOURS:
PER BOX X 3 3

TOTAL 3,000 5,100

PERCENTAGE OF COMPLETION X 100% 100%

TOTAL STANDARD HOUR 3,000 5,100

ACTUAL HOURS WORKED 2,980 5,130

VARIANCE IN HOURS (20) 30

STANDERD RATE X 15 15

DIRECT-LABOUR
EFFICIENCY VARIANCE $ (294) 441

CASE 10-62
LOT NO.

22 23
 DIRECT-LABOR RATE VARIANCE:

ACTUAL HOUR WORKED 2980 5130

RATE PAID IN EXCESS OF STANDARD

($15 -14.70) X 0.3 0.3

VARIANCE $ 894 1,539

3 JOURNAL ENTRIES:

i RAW-MATERIAL INVENTORY ( 95,000 X 1.10$)

DIRECT-MATERIAL PRICE VARIANCE

ACCOUNTS PAYABLE

ii TO RECORD THE PURCHASE OF RAW MATERIAL.

WORK-IN-PROCESS INVENTORY (93,600 X 1.10$)

DIRECT-MATERIAL QUANTITY VARIANCE

RAW-MATERIAL INVENTORY

TO ADD DIRECT-MATERIAL COST TO WORK-IN-PROCESS INVENTORY AND RECORD

THE DIRECT-MATERIAL QUANTITY VARIANCE.

WORK-IN-PROCESS INVENTORY (10,980 X 14.70 )

DIRECT-LABOUR RATE VARIANCE

DIRECT-LABOUR EFFICIENCY VARIANCE

WAGES PAYABLE

TO ADD DIRECT-MATERIAL COST TO WORK-IN-PROCESS INVENTORY AND RECORD

THE DIRECT-LABOUR VARIANCES AND RECORD THE INCURRENCE OF DIRECT-LABOUR COST
CASE 63
THE COMPLETED LIST IS SHOWN BELOW.BEGIN BY FILLING IN THE FACTS YOU KNOW.THE
REASONING USED TO REDUCE THE REMAINING DATA IS EXPLAINED AFTER THE LIST OF
ANSWERS.

i ACTUAL OUTPUT ( IN DRUMS)

= STANDARD QUANTITY OF DIRECT MATERIAL ALLOWED,GIVEN ACTUAL O

STANDARD QUANITY OF DIRECT MATERIAL A PER DRUM

= . 10,000 LB .
10LB.PER DRUM

= 1,000 DRUM

DIRECT LABOR TYPE ll, STANDERD RATE PER HOUR

= STANDARD COST OF DIRECT LABOUR TYPE II PER DRUM

STANDARD HOURS PER DRUM

= . $48 PER DRUM .

4 HR.PER DRUM

= $12

DIRECT LABOUR TYPE l, STANDERD QUANTITY ALLOWED,GIVEN ACTUAL OUTPUT

= 1,000DRUMS X 2 HR PER DRUM

= 2,000 HR
 DIRECT LABOUR TYPE ll, STANDERD QUANTITY ALLOWED,GIVEN ACTUAL OUTPUT

= 1,000DRUMS X 4 HR PER DRUM

= 4,000 HR

CASE# 63

DIRECT LABOUR TYPE l, ACTUAL RATE PER HOUR = $ 15.30 USE THE FORMULA FOR THE
DIRECT-LABOUR RATE VARIANCE AS FOLLOWS:

DIRECT-LABOUR RATE VARIANCE = AH ( AR - SR )

$600 U = 2,000 (AR - $15)

AR = $15.30

DIRECT LABOUR TYPE l, ACTUAL HOURS = 2,000 HR. SINCE THERE WAS NO LABOUR TYPE l
EFFICENCY VARIANCE,ACTUAL HOURS AND STANDERD HOURS ARE EQUAL.

DIRECT LABOUR TYPE l, ACTUAL RATE PER HOUR = $ 15.30 USE THE FORMULA FOR THE
DIRECT-LABOUR EFFICIENCY VARIANCE,AS FOLLOWS:

DIRECT-LABOUR ( ll ) EFFICIENCY VARIANCE = SR ( AH - SH )

$1,200 U = 12 ( AH - 4,000 )

AH = 4,100 HR

DIRECT-LABOUR ( ll ) RATE VARIANCE = AH ( AR - SR )

= 4,100 ( $11.90 - 12 )

= $ 410 F

CASE# 63
 DIRECT-LABOUR TYPE ( l ) EFFICIENCY VARIANCE = ZERO

NOW FILL IN THE REMAINING VARIANCE IN THE FOLLOWING TABULATION:

DIRECT MATERIAL VARIANCE :

A: PRICE VARIANCE 6,000

A: QUANTITY VARIANCE 2,500

B: PRICE VARIANCE 1,200

B: QUANTITY VARIANCE 600

DIRECT-LABOUR VARIANCE :

i RATE VARIANCE. 600

ii EFFICIENCY VARIANCE ?

iii RATE VARIANCE. 410

iv EFFICIENCY VARIANCE 1,200

TOTAL $ 1,510

THERE FOR,THE DIRECT-LABOUR TYPE ( l ) EFFICIENCY VARIANCE = $ 1,510-6,000+2,500

.+1,200-600+600-410+1,200 = ZERO

TOTAL OF ALL VARIANCESS FOR THE MONTH : $ 1,510 (FAVORABLE BECAUSE OF CREDIT TO

COST OF GOODS SOLD).

the end
CALCULATED AS FOLLOWS:

$
2,900,000
100,000
200,000
180,000

3,380,000

300

100

200

TOTAL FIXED COSTS

TRIBUTION MARGIN PER PATIENT-DAY

$3,380,000
200

16,900 PATIENT DAYS.

LCULATED AS FOLLOWS.
 $
540,000

180,000

966,660

DS + ADDITIONAL
D 22,000 PATIENT-DAYS;

(1,146,660)

DITIONAL 20 BEDS (606,660)

CT-LABOUR VARIANCES

24 TOTAL

1,200 3,900

24 24
28,800 93,600

28,825 93,365

25 (235)

1.10 1.10

28 (259)

24 TOTAL

1,200

3,600

100%

2,880 10,980

2,890 11,000

10 20

15 15

147 294

24 TOTAL
 2890 11000.0

0.3 0.3

867 3,300

104,500

1,900

106,400

102,960

259

102,702

ENTORY AND RECORD

161,406

3,300

294

165,000

ENTORY AND RECORD

RENCE OF DIRECT-LABOUR COST.
 N THE FACTS YOU KNOW.THE
PLAINED AFTER THE LIST OF

RIAL ALLOWED,GIVEN ACTUAL OUTPUT

CT MATERIAL A PER DRUM

B .

YPE II PER DRUM

DRUM .

VEN ACTUAL OUTPUT

VEN ACTUAL OUTPUT

USE THE FORMULA FOR THE

AH ( AR - SR )

2,000 (AR - $15)

HERE WAS NO LABOUR TYPE l

RS ARE EQUAL.

USE THE FORMULA FOR THE

SR ( AH - SH )

12 ( AH - 4,000 )

AH ( AR - SR )

4,100 ( $11.90 - 12 )
IANCE = $ 1,510-6,000+2,500

ORABLE BECAUSE OF CREDIT TO