PREPARED BY: MUSA SYARIF LUBIS ANDRY SATYA AHMAD AZMY VINA CAHYA FARHANI FAJAR RAMADHAN

COMPANY PROFILE
y Retail stores selling cookies (chocolate nut supreme) y The president is Mr Justine Madison

PROBLEM??
y Prepare a new contribution report February: 1. The Static Budget in contribution report 2. The variance in the contribution report y Total contribution margin in the flexible budget y Interpret the meaning of total contribution margin in the y

y y

flexible budget Calculate the total variance between the flexible budget (direct material-price variance, direct material quantity variance, direct labor rate variance, direct labor efficiency variance, variable overhead spending and efficiency variance, sales price variance) Explain the problems in direct labour hours How might activity ABC solve this problem

CONTRIBUTION MARGIN
y Static and variance report
Items Units (in punds) Revenue Direct Material Direct Labor Variable Overhead Total variable costs Contribution Margin Flexible Budget $ 225,000 $ 1,800,000 $ 326,250 $ 189,000 $ 364,500 $ 879,750 $ 920,250 Actual $ 225,000 $ 1,777,500 $ 432,500 $ 174,000 $ 375,000 $ 981,500 $ 796,000 Variance $ $ (22,500) $ 106,250 $ (15,000) $ 10,500 $ 101,750 $ (124,250) U U F U U U

TOTAL CONTRIBUTION MARGIN

y Total contribution margin from the new report are in

the static budget of 920.250, 796.000 actual, and variance -124.250 y Based on the results has been calculated that the contribution margin increases and variance decreases. This shows that the estimate is greater than actual budgets so that the company suffered losses. Companies can not get bigger than the actual profit

ACTUAL QUANTITY AND UNIT COST

Calculate actual quantity & unit cost
C Item ost D aterial irect C ix ookie ilk C hocolate A lmonds D L irect abor ixing aking Variable O verhead T Variable C otal osts 225,000 min $ 400,000 min $ $ $ 54,000 120,000 375,000 981,500 $ 54,000 $ 120,000 $ 364,500 $ 904,500 Q uantity A C lexible C A Q ctual ost ost ctual uantity A U C ctual nit ost 10.33 5.91 1.07 1.00 1.78 1.67 0.02 0.24 0.533333333 0 $ 14.40 $ 16 1.666666667 4.362222222 $ $

2,325,000 oz $ 46,500 $ 46,500 1,330,000 oz $ 266,000 $ 199,500 240,000 oz $ 120,000 $ 120,000

TOTAL ARIANCE
Calculate the total variance
L C C A f p A

( ( O ( (

) ) ) )

THE PROBLEM DIRECT LABOUR BASIS O ERHEAD

y If based at the problems that will arise is not efficient

in calculating the performance because production is not necessarily produced in accordance with the standardization of the company. y It is difficult to determine the estimated budget.

SOL E FROM ABC SYSTEM

y Several costs are Identified. y Counting the cost of overhead and fixed costs in

the calculation of working hours based on overhead. y More flexible in determining or changing the fee structure.

THANK YOU
ALHAMDULILAH