timmer bachman founded bachman corp

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Timmer Bachman founded the Bachman Corpora-tion over 25 years ago. The company’s genesis was spurred by the unique climbing apparatus developed by Timmer, an avid mountaineer. Bachman Corporation has continued to produce that first product, but it has now diversified into other out-door activity equipment as well. In fact, the vast majority of the company’s revenues are now accounted for by sales of nonclimbing products. Timmer is considering whether his company should continue producing and selling some of its oldest products, all of which relate to mountain climbing.

To begin his decision- making process, Timmer has asked the company’s controller, Marin Hennesy, to accumulate data on the original locking carabiner that set the company on its way. Accordingly, Marin accumulated the following data for last year: • Budgeted production and sales: 5,000 carabiners. • Actual production and sales: 6,000 carabiners. • The standard for a carabiner requires 1.5 ounces of material at a budgeted cost of $ 1.52 per ounce and two hours of assembly and testing time at a cost of $ 12.50 per hour. • The carabiner sells for $ 32 each. • Actual production costs for the 6,000 carabiners totaled $ 12,900 for 8,600 ounces of materials and $ 161,700 for 13,200 labor hours.

Required

A. What was the budgeted contribution margin per carabiner?

B. What was the actual contribution margin per carabiner?

C. What was Bachman’s flexible budget variance?

D. What was Bachman’s direct material price variance?

E. What was Bachman’s direct material usage variance?

F. What was Bachman’s direct labor rate variance?

G. What was Bachman’s direct labor efficiency variance?

H. What would the sales price variance be if each carabiner sold for $ 33?

I. On the basis of the available information, should Bachman continue making the carabiner?

 

 

 
 
 
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