Cost Accounting Analysis Essay examples

1756 Words Mar 29th, 2014 8 Pages
3.0 Variance Analysis
3.1 Flexible-Budget Variance Analysis
In Barnes Scuba Diving case, the main comparison for the flexible-budget variance analysis would be between the actual results and flexible budget. Static budget would not be useful for this comparison due to the different sales unit output which may result in a misleading and inaccurate result comparison.
With reference to the Flexible Budget Section attached in Annex X, Flexible-Budget Variance for Revenues was identified to be a favourable variance of $50,400 due to the fact that there was an increase of 216 participants on top of the budgeted 1800 participants and also an additional increased in course fee of $25 on top of the budgeted $350(selling price per unit). This
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Barnes does not need to bear responsibility to replace the logbook free of charge as it incurs additional cost. Since customers value the logbook, Barnes could have charge a nominal fee to replace the logbook to cover its cost, in which customer would not mind paying for if it was lost due to their carelessness. This could have prevented Barnes a cost of $2657.60 ($8.80X302) from replacing the logbook free of charge. T-Shirt/Sweater
The unfavourable price ($7863) and quantity ($9075) variances of T-Shirt/Sweater were due to the increase cost of $3 per unit from standard cost and increase quantity of 605 units for replacement of wrong T-Shirt sizes. Barnes could have control the increase cost per unit by sourcing for cheaper supplier instead of settling for T-Shirt R Us, who charges more per unit. Likewise, since Barnes was confident that the wrong T-Shirt sizes orders were not their responsibility and have evidence to prove, Barnes could have insist the supplier to bear responsibility of the wrong T-Shirt sizes and return the wrong order. Barnes would have prevented the additional cost of $10890 (605 unitsX$18) from incurring. Alternatively under the same situation, if Barnes could not get the supplier to be responsible for the wrong order, Barnes should not have given the extra T-shirts away to customers who wanted them. Barnes could have save the T-shirts for the next course intake for customers who may suit the

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