Question

3. The GLASSPECIAL company produces 2 products (glasses and bottles): products VC u Production/Sales volume Glasses 150 8 0 4.000 Bottles 230 150 1.500 We also know the annual production capacity of GLASSPECIAL (equal to 7.500 machine hours) and that to produce one glass the company needs 1 machine hour while to produce a bottle 4 machine hours. Determine the most economic mix of production/sales. 4. Which of the following is FALSE (only one correct answer): O Variance analysis is done through a simple comparison between budgeted and actual values for each element of cost. O Variance analysis implies the identification of the specific causes of the difference. O Production variance is composed by: direct labor variance, direct labor variance, general and administrative overheads variance. : O Mix variance is one of the component of the variance related to the gross contribution margin. O Mix variance is one of the component of the revenue variances. O No one of the previous answers.

Answer 1

Bottles Glasses 28 Selling Price Per Unit 29 150 230 Less Variable Cost Per Unit 30 -80 -150 Contribution Margin Per Unit 31 70 80 Number of Machine Hours Per Unit 32 Contribution Margin Per Hour 33 70 20 34 As the contribution margin per hour is higher in case of glasses I can maximum use glasses 35 36 Bottles Glasses 37 Number of Machine Hours Per Unit 38 1. 4 Number of units produced 39 4000 1500 Total Hours required 40 4000 6000 As the maximum number of hours available are 7500 we can use all the machine hours for glasses 42 as the contribution margin per machine hour is maximum in this case and use the remaining (7500 -4000)=3500 43 machine hours for producing bottles. 44 Glasses Bottles 45 Total Hours required 46 4000 3500 875 (3500/4) Number of units produced 47 4000 48 So the most economic product mix is 4000 glasses and 875 bottles. 49 50

4. Which of the following is FALSE 51 52 53 Production variance is composed by: direct labor variance, direct labor variance, general and administrative overheads variance. 54 Production volume variance measures the amount of overhead applied to the number of units.It is calculated 55 56 by taking the difference between the budgeted number of units and actual number of units produced multiplied 57 by the budgeted overhead rate. 58 59