MANAGEMENT ACCOUNTING

Question 1: Company XYZ has budgeted the following production costs for the upcoming quarter:

Direct Materials: $50,000

Direct Labor: $30,000

Factory Overhead: $20,000

Calculate the total standard cost for production. If the actual production costs turn out to be $100,000, determine the budget variance and analyze its implications.

Question 2:Imagine you are a financial analyst for a manufacturing company. Develop a detailed budget for the upcoming fiscal year, considering various factors such as sales forecasts, production costs, and overhead expenses.

Question 3: A manufacturing company sets a standard labor cost of $15 per hour for producing a product. During a particular month, the actual labor hours worked were 2,000 hours, and the actual labor cost incurred was $30,000. Calculate the labor rate variance and the labor efficiency variance. Interpret the results and provide recommendations for improvement.

Question 4: Company ABC has the following financial data:

Current Assets: $200,000

Current Liabilities: $120,000

Inventory: $80,000

Accounts Receivable: $60,000

Accounts Payable: $40,000

Calculate the company’s working capital, current ratio, and quick ratio. Analyze these ratios and provide insights into the company’s liquidity position.

Question 5: Assess the effectiveness of ratio analysis in evaluating a company’s financial performance. Discuss the limitations of using ratios and suggest alternative financial analysis tools that can complement or overcome these limitations.