TRACY CORPORATION ACCOUNTING CASE

Tracy Corporation Accounting Case

Tracy Corporation Accounting Case

There are a variety of reasons why Tracy Corporation classifies costs as fixed or variable components. These reasons include price fixing, decreasing costs, profit planning, cost-benefit analysis, cost-volume-profit analysis and budgeting. Tracy Corporation may also use different methods to classify cost behaviour, namely managerial judgment, engineering approach, quantitative analysis (such as the high-low method), visual fit and regression analysis. (The sources mentioned could also be consulted for the advantages and disadvantages of each method.)

Actual

Budgeted

Variances

 

Sales (9500 gallons)

588500

600000

-11500

Cost of Sales:

 

Direct Materials (37000 kg)

120000

120000

 

Direct labor (49000 hours)

200000

200000

 

Variable Overhead

47000

50000

 

Fixed Overhead

145000

150000

 

512000

520000

-8000

Profit

76500

80000

-3500

Direct labour will probably be a ...