Appendix

Exhibit 1 – Mission Statement – Finch

Finch’s goal is to be the product of choice for discerning backyard BBQ enthusiast by exceeding customer expectations and pro

Exhibit 2 Finch's Actual Income Statement (in millions)

2017 2018 2019 2020 2021

Revenue $28.80 $30.00 $34.00 $36.00 $52.00
Cost 23.9 25.5 27.4 29.5 42.5
Net Income $4.90 $4.50 $6.60 $6.50 $9.50

Investment (Assets) $40 $45 $45 $50 $60

Exhibit 3: Finch BBQ Budget and Actual Results for 2021

BBQ Smoker Budget Total Actual Variance
Per Unit (budgeted) 18,000 19,000 -1,000
Revenue $ 800 $14,400,000 $14,231,000 $ 169,000
Direct Material Cost $ 240 $4,320,000 $4,520,100 $ (200,100)
Manufacturing Labour (per unit) $ 96 $1,728,000 $1,914,250 $ (186,250)
Variable Overead Costs (per unit) $ 24 $432,000 $467,400 $ (35,400)
Fixed Overhead Costs $ 54 $972,000 $1,050,000 $ (78,000)
Operating Income $6,948,000 $6,279,250 $ 668,750

Other Fixed Costs

Support and Administration $500,000 500,000 475,000 $ 25,000
Total other fixed costs $500,000 500,000 475,000 $ 25,000
Net Income $ 5,948,000 $ 5,329,250 $ 618,750

Standard Cost Card (Budgeted per unit)

Direct Materials 6 component parts @ $40 per part
Direct Labour 6.0 hours per unit @ $16/hour
Variable Manufacturing overhead 6.0 hours per unit @ $4/hour
Fixed Manfuacturing overhead 6.0 hours per unit @ $9/hour

Actual Direct material purchased/used per unit 115900 component parts @ $39/part
Actual manufacturing labour hours per unit 117800 hours @ $16.25/hour
Actual variable overhead cost (DLH) Total $467,400
Actual FMOH (DLH) Total $1,050,000

Exhibit 4 Budgeted Costing information for the year (2021)

Activity Areas Cost Driver Overhead Cost Total Activity

Material-handling Parts $442,500 885,000 parts
Machining Machine-hours $897,000 230,000 machine hours
Batch production Batches $155,100 50 batches
Labour related Direct Labour Hours $890,400 318,000 hours
Total Overhead $2,385,000

Finchs’ total manufacturing overhead for the BBQ Smoker was estimated to be $2,385,000 for the year and the estimated num

BBQ Smoker Regular BBQ

Direct materials cost per unit $240 $100
Direct labour cost per unit $96 $75
Direct labour hours per unit 6 6
Parts per unit 20 15
Machine-hours per unit 5 4
Production Batches (total) 30 20

Budgeted number of Units 18,000 35,000

Selling Price per unit $800 $400

Exhibit 5: Budgeted Sales of the BBQ Smoker per quarter (2021)

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Sales (units) 2,500 4,500 8,000 3,000 18,000

Exhibit 6: Actual Manufacturing Overhead and Labour hours for 2021 and Regression Output Data for the BBQ Smoker.
Month Labour Hours Overhead Cost
Jan 4500 $ 105,000
Feb 4000 $ 110,000
Mar 6500 $ 117,000
Apr 8000 $ 120,000
May 10000 $ 120,300
June 9000 $ 125,000
July 22000 $ 163,100
Aug 15000 $ 159,000
Sept 11000 $ 143,000
Oct 7500 $ 125,000
Nov 4100 $ 110,000
Dec 6500 $ 120,000

Regression Analysis Results:

Formula: Y = $3.41 (X) + $95,717.12
R-squared: 0.882
mer expectations and providing innovative products that will last.

5,000 parts
0,000 machine hours
8,000 hours

ar and the estimated number of direct labour hours to be worked was 318,000 hours for the year to meet production needs.

or the BBQ Smoker.

oduction needs.
Name Shuvo Bhatta
ID 101286817
Question 1
2017 2018 2019 2020 2021
Net Income [million] 4.9 4.5 6.6 6.5 9.5
Invested capital 40 45 45 50 60
cost 23.9 25.5 27.4 29.5 42.5
total investment 63.9 70.5 72.4 79.5 102.5
ROI in % 7.6682316 6.3829787234 9.116022 8.176101 9.268293
RESIDUAL INCOME [million ] 0.9 0 2.1 1.5 3.5

Question 2
Fixed costs 1472000
Variable cost /unit 360
selling price per unit 800
Contribution Margin 440
BEP 3345.4545

acutal sales units 19,000

Margin of safety in units 15,655

Margin of safety in dollars 6888000

Question 3
Actual Cost DM 4520100
Budgeted cost DM 4320000
Direct material variance analysis 200100 unfavorable

Actual cost DL 1914250

Budgeted cost DL 1728000
Direct labor variance 186250 unfavorable

Actual variable MOH 467400

Bdugeted variable MOH 432000
Variable Manufacturing overhead 35400 unfavorable

actual fixed MOH 1050000

budgeted fixed MOH 972000
Fixed manufacturing overhead var 78000 unfavorable

Question 4
Month Labor hours Cost
Highest activity level Jan 4000 110000
Lowest Activity Level July 22000 163100

Variable cost per labor hour 2.95 per labor hr

Fixed cost [ using low point ] 98200

Y = $2.95 (X) + $98,200

wacc [ assumptions ] 10%

CORRESPONDING FORMULAS
ROI = (Net Profit / Cost of Investment) x 100%
Residual Income = Net Operating Income - (Cost of Capital × Invested Capital)

Break-Even Point (in units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Safety margin (units) = Actual sales in units - Break Even Point

Safety margin (dollars) = Safety margin (units) x Contribution margin per unit

Direct Material Variance = Actual Cost - Budgeted Cost

Direct Labour Variance = Actual Cost - Budgeted Cost

variable MOH variance analysis = actual cost - budgeted cost

Fixed Manufacturing Overhead Variance = Actual Cost - Budgeted Cost

Variable Cost per Labor Hour = (Change in Overhead Cost) / (Change in Labor Hours)
Fixed Cost = Total Overhead Cost - (Variable Cost per Labor Hour * Labor Hours)
Question 5

Traditional Overhead Costing (using Direct Labor Hours):

TOTAL MOH 2385000
TOTAL DL HRS 318,000
overhead cost per labor hour 7.5

bbq regular
overhead cost per unit 45 45
DM 240 100
DL 96 75
total unit cost $ 381.00 $ 220.00

Activity based costing

bbq regular
total unit cost $ 475.36 $ 276.94

BBQ REGULAR
PROFITABILITY
Traditional method $ 419.00 $ 180.00
ABC method 324.64 123.06

Question 6

Budgeted schedule of cash collection for 2021

Q1 Q2
SALES [ UNITS ] 2,500 4,500
Sales $ 2000000 36000000
Collections
Current quarter 1500000 27000000
Previous Quarter 400000
Total Collections $ 1,500,000.00 $ 27,400,000.00

Budgeted Production Cost:

Q1 Q2
Sales units 2,500 4,500
Desired ending inventory 250 450
Total needs 2,750 4,950
Beginning ending inventory 0 250
Required Production [ units ] 2,750 4,700

Q1 Q2
Required Productions [units ] 2,750 4,700
DM cost 660000 1128000
DL cost 264000 451200
Variable overhead cost 66000 112800
Fixed overhead cost 148500 253800
Total Production cost $ 1,138,500.00 $ 1,945,800.00

Question 7
Documented in the word file
Q3 Q4 TOTAL
8,000 3,000 18,000
6400000 2400000 14400000

4800000 1800000 10800000

7200000 1280000 480000
$ 12,000,000.00 $ 3,080,000.00 $ 11,280,000.00

Q3 Q4 Total
8,000 3,000 18,000
800 350
8,800 3,350 18,350
450 800
8,350 2,550 18,350

Q3 Q4 total
8,350 2,550 18,350
 2004000 612000 4404000 $ 3,683,100.00
801600 244800 1761600
200400 61200 440400
450900 137700 990900
$ 3,456,900.00 $ 1,055,700.00 $ 7,596,900.00