acct project

ACCT 2302 – Assignment 2SwediTrak
SwediTrak manufactures a type of exercise equipment. It is a single product manufacturing
company that has two identical manufacturing facilities, each with an installed monthly capacity
of 1250 units, one at Dallas and the other at Fortworth. These facilities are managed by
Michael Nowitzki and Scottie Duncan, Jr., respectively. Every month, the marketing
department, based at the Corporate Head Quarters, allocates the required production between the
two facilities and the facilities produce accordingly. The marketing manager reports directly to
the CEO of the company, Mr. Scottie Duncan, Sr. Both manufacturing facilities follow Just in
Time policies and operate with near-zero DM, WIP and FG inventories at any point in time.
The manufacturing facilities are free to make their own purchasing, recruiting and cost decisions
and are evaluated as cost-centers. The company uses a standard full costing system.
You are the Chief Financial Officer of this company and have just received the production and
cost reports for the month of January 2023 from both the facilities. You have just started
looking at the numbers when the CEO walks into your room. He takes a quick look at the
reports and remarks, “Well, looks like Junior is doing a heck of a job at Fortworth. His unit
cost seems to be actually below the standard unit cost. On the other hand, Michael seems to be
losing his touch. He seems to have had a cost over-run. May be we should put Junior in
charge of both the facilities and ask Michael to report to him. Why don’t we talk about this in
tomorrow’s board meeting?”
After the CEO leaves your room, you read the reports in detail and extract the following data.
Standards (these are same for both facilities)
Direct materials (only one type is used in production)
Direct labor (only one type is used in production)
Variable manufacturing overhead (VMOH)
Fixed manufacturing overhead rate (FMOH)
Standard unit cost
Budgeted fixed manufacturing overhead
3 lbs. per output unit @ $10/lb.
2 hours per output unit @ $11/hour.
$8 per direct labor hour.
$50 per output unit.
$118
$50,000 per month
Actuals
Actual production
Dallas
800 units.
Fortworth
1,200 units.
Direct material bought
and consumed
2,200 lbs @ $9.70/lb.
3,700 lbs @ $10.40/lb
Direct labor
1,580 hours @ 11/hour
2,450 hours @ 11.25/hour
Variable MOH expenses
$12,300
$20,000
Fixed MOH expenses
$50,000
$50,000
Average unit cost
$126.28
$113.37
Required:
Do a detailed cost variance analysis for direct material, direct labor and variable manufacturing
overhead using flexible budgets for both facilities and use the findings in evaluating the
performance of the two managers.
Write a short memo to the board of directors which
summarizes your evaluation of the performance of the managers during the month of January.