Alpha Plc manufactures and sells a single product and has a standard costing system in which purchases of materials are recorded at standard cost, direct material costs and direct labour costs are variable and production overheads are fixed and absorbed using direct labour hours. The budgeted and actual results for the month of November 20X6 are as follows: (a) Budgeted Production Units are 200,000 whereas actual production units are 190,000. (b) Budgeted material purchased is 10,000 kgs amounting to $4,500,000 whereas actual material purchased is 9595kgs amounting to $3,838,000. (c) Budgeted direct labours is 20,000 hours amounting to $200,000 whereas actual direct labour hours is 20,000 hours amounting to $240,000. (d) Budgeted Fixed Overheads is $1,250,000 whereas actual fixed overheads is $1,375,000. (e) There is material price variance of $479,750 (favourable) & material usage variance of $42,750 (adverse) Calculate the following information for November: (i) standard rate per hour for labour (ii) standard hours of labour for actual production (iii) the total standard cost for actual production (iv) Budgeted cost for 190,000 units (v) Labour rate variance (vi) Labour efficiency variance (vii) Fixed overhead expenditure variance (viii) Fixed overhead volume variance (ix) Actual cost for 190,000 units
Alpha Plc manufactures and sells a single product and has a standard costing system in which purchases of materials are recorded at standard cost, direct material costs and direct labour costs are variable and production overheads are fixed and absorbed using direct labour hours. The budgeted and actual results for the month of November 20X6 are as follows: (a) Budgeted Production Units are 200,000 whereas actual production units are 190,000. (b) Budgeted material purchased is 10,000 kgs amounting to $4,500,000 whereas actual material purchased is 9595kgs amounting to $3,838,000. (c) Budgeted direct labours is 20,000 hours amounting to $200,000 whereas actual direct labour hours is 20,000 hours amounting to $240,000. (d) Budgeted Fixed Overheads is $1,250,000 whereas actual fixed overheads is $1,375,000. (e) There is material price variance of $479,750 (favourable) & material usage variance of $42,750 (adverse) Calculate the following information for November: (i) standard rate per hour for labour (ii) standard hours of labour for actual production (iii) the total standard cost for actual production (iv) Budgeted cost for 190,000 units (v) Labour rate variance (vi) Labour efficiency variance (vii) Fixed overhead expenditure variance (viii) Fixed overhead volume variance (ix) Actual cost for 190,000 units
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Alpha Plc manufactures and sells a single product and has a standard costing system in which purchases of materials
are recorded at standard cost, direct material costs and direct labour costs are variable and production overheads are
fixed and absorbed using direct labour hours. The budgeted and actual results for the month of November 20X6 are as
follows: (a) Budgeted Production Units are 200,000 whereas actual production units are 190,000. (b) Budgeted material
purchased is 10,000 kgs amounting to $4,500,000 whereas actual material purchased is 9595kgs amounting to
$3,838,000. (c) Budgeted direct labours is 20,000 hours amounting to $200,000 whereas actual direct labour hours is
20,000 hours amounting to $240,000. (d) Budgeted Fixed Overheads is $1,250,000 whereas actual fixed overheads is
$1,375,000. (e) There is material price variance of $479,750 (favourable) & material usage variance of $42,750 (adverse)
Calculate the following information for November: (i) standard rate per hour for labour (ii) standard hours of labour for
actual production (iii) the total standard cost for actual production (iv) Budgeted cost for 190,000 units (v) Labour rate
variance (vi) Labour efficiency variance (vii) Fixed overhead expenditure variance (viii) Fixed overhead volume variance
(ix) Actual cost for 190,000 units
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