THE SIMILARITIES AND DIFFERENCES BETWEEN

BANGLADESH AND VIETNAM

COURSE ID: ECN202; SECTION: 07

Submitted by: Md. Rakib Mallick (ID: 1921633)

Submitted to: Mumtahina Islam

Submission Date: 26th April, 2021
Contents
Introduction..............................................................................................................................................................3

Question No.1..........................................................................................................................................................3

*Use the budget data to calculate the per-unit fixed and variable cost allocated to production. What was the actual cost
per unit of production and shipping?.................................................................................................................................3

Question No.2..........................................................................................................................................................4

*Draft a flexible budget based on the data provided..........................................................................................................4

Question No.3..........................................................................................................................................................5

*Prepare a flexible budget performance report..................................................................................................................5

Question No. 4.........................................................................................................................................................6

*The factory accountant’s performance analysis report has been presented to Mr. Rahman. Using Table I, comment on
the findings. Suggest areas of improvement before it is sent to the head office of FARR ceramics that the manager may
like to be reflected in this analysis. (Hints: it might be useful to look into the material price and quantity variances and
labor rate and efficiency variances)...................................................................................................................................6

Question No. 5.........................................................................................................................................................7

*What is the implication on non-variable manufacturing cost if the decline in order by Rosenthal continues? Prepare a
sensitivity analysis considering the declining order trend and suggest FARR Ceramics’ possible ways of improving
their current performance..................................................................................................................................................7

Reference.................................................................................................................................................................9
 INTRODUCTION

QUESTION NO.1
*Use the budget data to calculate the per-unit fixed and variable cost allocated to

production. What was the actual cost per unit of production and shipping?

  Actual Budget
Units 14000 18000
Total Fixed Production Cost 149,200 148,000
Total Variable Production Cost 404,000 484,000
Budgeted Fixed Production Cost Per 8.22
Unit
Budgeted Variable Production Cost Per 26.89
Unit

Actual Production Cost Per Unit

  Production
Direct Material 85,400
Direct Labor 246,000
Indirect Labor 44,400
Idle Time 14,200
Cleanup Time 10,000
Miscellaneous 4,000
Supervision 58,800
Rent 20,000
Depreciation 60,000
Other 10,400
Total Production Cost 553,200
Actual Production Cost Per Unit 39.51

Actual Shipping Cost Per Unit

  Shipping
Variable Shipping costs 28000
Actual Shipping Cost Per Unit 2

QUESTION NO.2
*Draft a flexible budget based on the data provided.

  Per unit price Flexible Budget

(14,000 units)
  BDT BDT
Sales 48 672,000
Variable manufacturing costs:
Direct Material 6 84,000
Direct Labor 16 224,000
Indirect Labor 3.2 44,800
Idle Time 0.8 11,200
Cleanup Time 0.6 8,400
Miscellaneous Supplies 0.288888889 4,044
Total variable manufacturing cost - 376,444
Variable shipping cost 1.6 22,400
Total variable cost - 398,844
Contribution Margin - 273,156
Non-Variable Manufacturing costs
Supervision 57,600
Rent 20,000
Depreciation 60,000
Other 10,400
Total non-variable manufacturing costs 148,000
Selling and administrative costs 112,000
Total non-variable and programmed costs 260,000
Operating Income (Loss)   13,156

QUESTION NO.3
*Prepare a flexible budget performance report.

  Flexible Budget Actual Performance

Condition

  BDT BDT  

Sales 672,000 686,000 F

Variable manufacturing costs:  

Direct Material 84,000 85,400 U

Direct Labor 224,000 246,000 U

Indirect Labor 44,800 44,400 F

Idle Time 11,200 14,200 U

Cleanup Time 8,400 10,000 U

Miscellaneous Supplies 4,044 4,000 F

Total variable manufacturing cost 376,444 404,000 U

Variable shipping cost 22,400 28,000 U

Total variable cost 398,844 432,000 U

Contribution Margin 273,156 254,000 U

Non-Variable Manufacturing costs:  

Supervision 57,600 58,800 U

Rent 20,000 20,000 -

Depreciation 60,000 60,000 -

Other 10,400 10,400 -

Total non-variable manufacturing costs 148,000 149,200 U

Selling and administrative costs 112,000 112,000 -

Total non-variable and programmed costs 260,000 261,200 U

Operating Income (Loss) 13,156 (7,200) U

QUESTION NO. 4
*The factory accountant’s performance analysis report has been presented to Mr.

Rahman. Using Table I, comment on the findings. Suggest areas of improvement before it

is sent to the head office of FARR ceramics that the manager may like to be reflected in

this analysis. (Hints: it might be useful to look into the material price and quantity

variances and labor rate and efficiency variances)

  Direct Labor Direct Material

Actual Price 45 46.92
Actual Quantity/ Hour 5467 1820
Standard Price 40 46
Standard Quantity/ Hour 5600 1820

Actual Quantity of Input at Actual Quantity of Input at Standard Quantity Allowed for actual
Actual Price Standard Price Output at Standard Price
85394.4 83720 1820
83720

Segmented Method Formula Method

Material Price 1674.40 1674.4 U
Variance
Quantity Variance 0 0 0

Actual Hours of Input at Actual Hours of Input at Standard Hours Allowed for actual
Actual Price Standard Price Output at Standard Price
246015 218680 5600
224000

Segmented Method Formula Method

Material Price 27335.00 27335.00 U
Variance
Quantity Variance 5320.00 5320.00 F

QUESTION NO. 5
*What is the implication on non-variable manufacturing cost if the decline in order by

Rosenthal continues? Prepare a sensitivity analysis considering the declining order trend

and suggest FARR Ceramics’ possible ways of improving their current performance.

  Actual Budgeted
Level of Activity 20,000 20,000
Selling Price 49 48
Sales 980000 960000
   
Variable Costs per Unit 20.20 26.89
Variable Costs 404,000
537,778
 Contribution Margin 576,000
422,222

Percentage change- Degree 59% 44%

of sensitivity

The analysis shows that the actual percentage of degree of sensitivity is more than the budgeted ones, which
implies that there is a trend of declining ordered quantity and presumably it has been continuing.
So my personal suggestions towards FARRS ceramics would be, to take steps for to renegotiate larger, more
profitable contracts with the buyer. Besides this, the company should work on the unfavorable direct material
price variance and labor rate variance.
 REFERENCE
 https://www.rosenthalco.uk/en/cms/company/the-rosenthal-company/company-history/
 http://www.farr.com.bd/online/
 https://corporatefinanceinstitute.com/resources/knowledge/accounting/managerial-accounting/
 https://courses.lumenlearning.com/acctmgrs/chapter/1-1-characteristics-of-managerial-accounting/
 https://opentextbc.ca/principlesofaccountingv2openstax/chapter/distinguish-between-financial-and-
managerial-accounting/
 https://www.iedunote.com/management-accounting
 https://www.accountingtools.com/articles/what-are-the-functions-of-managerial-accounting.html
 https://www.business.nova.edu/masters/master-of-management-accounting.html