A1)

Monthly Budget
Particulars ('000)
No. of units 200
Total Revenue $41,240
Total Variable Cost $40,411
Total Fixed Cost $729

Contribution Margins Calculation

Selling Price per unit $206.20

Variable Cost per unit $202.06

Contribution Margin = SP per unit $4.14

- Variable cost per unit

Break Even Point( No of units to break even) 175875

A2) Budgeted cost per unit if all manufacturing overhead ( both fixed and variable) costs are allocated to planned production
Budgeted Total Cost $41,140,000
Expected Cost per unit = Budgeted total
Budgeted Production Units
cost/Budgeted No. of units 200,000
205.7

Actual cost per unit of production and shipping

Actual Total Cost $38,148,000
Actual production units 180,000
Actual cost per unit 211.93

A3) August 2010 Flexible Budget and Vairances

All units are in Thousands of $
 Budgeted figures Expected figures Actual figures
Particulars for 200,000 units for
(Budgeted Figures for 180,000 units
180,000 units Variance
x 180,000/200,000)
Revenue (Transfer from Shenzhen) $41,240 $37,116 $37,476 $360
Variable Costs
Materials
Flash Memory $5,400 $4,860 $5,249 $389
Application Processes $2,150 $1,935 $1,935 $0
Chips-phone $2,810 $2,529 $2,529 $0
Gyroscope $520 $468 $468 $0
8 other chips $14,190 $12,771 $12,643 $128
Variable supplies and tools $12,508 $11,257.20 $11,305 $47.80
Sub-Total $37,578 $33,820.20 $34,129 $308.80
Labour
Assembly and Packaging $2,622 $2,359.80 $3,092 $732.20
Shipping $212 $190.80 $191 $0.20
Total Variable Cost $40,412 $36,370.80 $37,412 $1,041.20
Fixed Costs
Factory Rent $400 $400 $400 $0
Machine Depreciation $150 $150 $150 $0
Utility Fee and Taxes $52 $52 $52 $0
Supervision $127 $127 $134 $7
Total Fixed Costs $729 $729 $736 $7
TOTAL COST $41,141 $37,099.80 $38,148 $1,048.20

NET INCOME $99 $16.20 ($672) $688.20

]
A4)

Flash Memory Price Variance

(Actual Price - Standard Price) * Actual Quantity = Performance
$29-$27 * 18000 + 1000 $362,000.00 Unfavourable
Flash Memory Usage Variance
(Actual Quantity - Standard Quantity) * Standard Price = Performance
181,000-180,000 * $27 $27,000.00 Unfavourable

Total Flash Memory Variance = Flash Memory Price Variance + Flash Memory Usage Variance=
$362,000 Unfavourable + $27,000 Unfavourable = $389,000.00 Performance Unfavourable

Overhead Spending Variance = Performance

Actual Fixed Overhead - Standard Fixed Overhead
$736,000-$729,000 $7,000.00 Unfavourable

Labour Price Variance

Since Labour Rates have increased by 30% .
Actual price of Labour = Standard Price *1.3
Variance = Performance
$713,538.46 Unfavourable

Labour Usage Variance

Total Labour variance - Labour Price Variance
Variance = Performance
$18,661.54 Unfavourable
 Adjustment
Performance Factor
0.9
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Unfavourable
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Unfavourable
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Unfavourable