Reference no: EM131794120

Question A

Bath Products Ltd manufactures a variety of bath and beauty products for specialty stores.The company has recently introduced the concept of identifying cost of quality and has identified the following costs for the month:

Rework time $6,000

Cost of defective products that cannot be reused $7,000

Laboratory testing for safety $9,000

Training of quality control supervisors $10,500

Customer complaints $5,800

Inspection of purchased ingredients $3,800

Product liability $500

Sales Revenue for the month was $20500.

Required:

1. Prepare a cost of quality report. The report should include the following information:

? Classification of the above costs as internal failure, external failure, appraisal andprevention costs.

? Calculation of each cost with respect to percentage of sales.

? Calculation of each cost with respect to percentage of total quality costs.

2. Prepare a report for the management of Bath Products Ltd, based on the above analysis.

Question B

Hyde Company has set the following standards for one unit of product:

Direct material: $32 per unit

Quantity 4 kg per unit

Price $8 per kg

Direct labour $52.50 per unit

Quantity 2.5 hours per unit

Rate $21 per hour

Actual costs incurred in the production of 2,500 units were as follows:

Direct material $72,540 ($9.30 per kg)

Direct labour $115,206 ($21.10 per hour)

Required:

1. Calculate the direct material price and quantity variances and the direct labour rate and efficiency variances.

2. Indicate whether each variance is favourable or unfavourable.

Question C

Five-Star Pizza delivers pizzas to the residential halls and units near a major university. The company's annual fixed expenses are $40,000. The sales price of a pizza is $16, and it costs the company $8 to make and deliver each pizza.

Required:

1. Calculate the company's break-even point in units (pizzas).

2. What is the contribution margin ratio?

3. Calculate the break-even sales revenue. Use the contribution margin ratio in your calculation.

4. Explain the concept of ‘break-even' point and justify your answers in 1 & 3 above, with the calculation using contribution margin format of income statement.

5. How many pizzas must the company sell to earn a target net profit of $50,000? (Ignore income taxes.)

6. How many pizzas should Five-Star Pizza sell in order to make a $60000 net profit after tax? Assume that the tax rate is 25%.

7. What is the Five-Star Pizza's total profit or loss when 5200 pizzas are sold?

8. What is the Five-Star Pizza's total profit or loss when 4800 pizzas are sold?

Question D

Using your imagination and creativity, develop a contemporary performance measurement system for a local university, with the use of objectives, lead and lag indicators in various perspectives.