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- 12 Marks
Question
The following information relates to product Jupiter, produced by Bfield Ltd during January. This represents the information that remains after a fire in the premises destroyed most of the accounting records.
| Variances | GH¢ |
|---|---|
| Selling price | 50,000 A |
| Materials price | 28,500 F |
| Materials usage | 7,500 A |
| Labour rate | 18,700 F |
| Labour efficiency | 20,400 A |
Actual data
- Sales (25,000 units at GH¢10) = GH¢250,000
- Materials costs (112,500 kg at GH¢1.20) = GH¢135,000
- Labour costs (75,000 hrs. at GH¢1.9) = GH¢142,500
There was no opening or closing inventories.
Required:
Calculate the following:
i) Standard selling price per unit; (3 marks)
ii) Standard cost of material per kilogram; (3 marks)
iii) Standard kilograms of materials required per unit; (2 marks)
iv) Standard labour rate per hour; (2 marks)
v) Standard hours of labour required per unit. (2 marks)
Answer
i) Standard selling price per unit
- Sales price variance:
25,000 units should have brought in (25,000 x S) =25,000
Variance=50,000A
Calculation: 25,000×S=GH¢300,000
S=GH¢300,000/25,000=GH¢12
ii) Standard cost of material per kilogram
Material price variance:
112,500 kg should have cost (112,500 x C)=112,500C
112,500 kg did cost=135,000
Variance=28,500F
Calculation:
112,500×Cost=GH¢163,500
C=GH¢163,500/112,500=GH¢1.453
iii) Standard kilograms of materials required per unit
- Material usage variance:
25,000 units should have used (25,000 x Kg)=25,000Kg
25,000 units did use=112,500
Variance=7,500A
Calculation:
25,000×Kg=107,338
iv) Standard labour rate per hour
Labour rate variance:
75,000 hours should have cost (75,000 x C)=75,000C
Variance=18,700F
Calculation:
75,000×Cost=GH¢161,200
C=GH¢161,200/75,000=GH¢2.15
v) Standard Labour hours per unit of product
Labour efficiency variance:
25,000 units should have used (25,000 x Hrs)=25,000Hrs
25,000 units did use=75,000
Calculation:
Hrs.=65,512/25,000=2.62hrs
- Tags: Cost Control, Labour Variance, Material Variance, Standard Costing, Variance Analysis
- Level: Level 2
- Topic: Standard Costing and Variance Analysis
- Series: MAY 2018
- Uploader: Joseph