Costs:Direct materials (17 560 kilos) 119 408 Direct labour (23 000 hours) 233 450Fixed overheads 70 000 Required; (a) Calculate the following variances also state wheth are favourable or un - Favourable. (1)quantity (the difference between the profits expected on 10 000 units and the profit which would be expected on 18 000 units); (ii)sale price (iii)direct material usage and price:(iv) Direct labour efficiency and rate (b)Prepare a financial statement reconciling the expected profit to the actual profit showing

Costs:Direct materials (17 560 kilos) 119 408 Direct labour (23 000 hours) 233 450Fixed overheads 70 000 Required; (a) Calculate the following variances also state wheth are favourable or un - Favourable. (1)quantity (the difference between the profits expected on 10 000 units and the profit which would be expected on 18 000 units); (ii)sale price (iii)direct material usage and price:(iv) Direct labour efficiency and rate (b)Prepare a financial statement reconciling the expected profit to the actual profit showing

Name: Following is the information about cost system of K and A Ltd. For th
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Description: Following is the information about cost system of K and A Ltd. For the year ended 31 October 1998. Estimate of revenue and costs for 10 000 units. $Revenue 300 000Costs:Direct materials (10 000 kilos) 60 000 Direct labour (at $11 per hour) 132 000Fi

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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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Question

Following is the information about cost system of K and A Ltd. For the year ended 31 October 1998. Estimate of revenue and costs for 10 000 units. $Revenue 300 000
Costs:Direct materials (10 000 kilos) 60 000 Direct labour (at $11 per hour) 132 000Fixed overheads 70 000 Actual revenue and costs for 18 000 units $Revenue 504 000
Costs: Direct materials (17 560 kilos) 119 408 Direct labour (23 000 hours) 233 450Fixed overheads 70 000 Required; (a) Calculate the following variances also state whether
are favourable or un - Favourable. (i) quantity (the difference between the profits expected on 10 000 units and the profit which would be expected on 18 000 units); (ii) sales
price; (iii) direct material usage and price; (iv) Direct labour efficiency and rate. (b) Prepare a financial statement reconciling the expected profit to the actual profit showing
the variances calculated in (a).

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