Reference no: EM132539962

CASE - NORTH AMERICAN CAN (A): THE KOKOMO DIVISION

The Kokomo division of the North American Can Company produced a single product: a 12-ounce beer can. Exhibit 1 provides financial information about the revenues and costs that were projected for 1986 for the Kokomo division. The total market volume is expected to be 60,000 units for the year. The volume of production and sales for the Kokomo division is projected to be 12,000 units for the year. A unit is 400 cases. Each case contains 24 of the 12-ounce cans.

Required
Prepare a 1986 profit plan for the Kokomo division (the profit plan is be¬fore income taxes). The Kokomo division's budgeted sales and production volumes are equal.

CASE - NORTH AMERICAN CAN (B): THE KOKOMO DIVISION

Exhibit 1 provides the actual results of operations for the Kokomo division the first quarter of 1986. Kokomo employed a standard full-cost system.

Required
1. Compare the actual results with-the budgeted amounts prepared in (A) case. (The budget for the first quarter is one-fourth of the an budget).
2. What conclusions can you draw about the first quarter financial perf ance of the Kokomo division?
3. What managerial actions would you take as a result of your analysis?

CASE - NORTH AMERICAN CAN (C): THE KOKOMO DIVISION

Exhibit 1 provides a more detailed description of both budgeted and actual re¬sults of operations for the Kokomo division for the first quarter of 1986.

Required
1. Analyze the causes of the variances from budget and evaluate the first quarter's financial performance of the Kokomo division.
2. Separate the variances into three classifications:
(a) Largely controllable by management.
(b) Largely uncontrollable by management.
(c) Semi controllable by management.
3. What managerial actions would you take on the basis of your analysis?

Attachment:- Budgeting and control case.rar