ISOS Chemopro Ltd is producing a wide range of chemical products. It uses a standard costing system to record and monitor its purchases and usage of materials. For April 2007, the following information was obtained about the purchase and usage of chemical XU377: Actual purchaselusage: Actual price: 14,050 litres £25,852 Because of fire risk and the danger to health, no inventories are held by the business. XU377 is only used in the manufacture of one product called P010. For the production of 2,500 litres of P010, the firm budgeted to use 100 litres of XU377 at a total budgeted cost of £196 (for the 100 litres). During April 2007, 318,750 litres of P010 were produced. Required: a) Calculate the price and efficiency variances for XU377 for April 2007. b) What is the point in flexing the budget in the context of variance analysis? Explain and discuss. c) Why are variance reports a useful tool of management? What are potential problems? Explain and discuss.

ISOS Chemopro Ltd is producing a wide range of chemical products. It uses a standard costing system to record and monitor its purchases and usage of materials. For April 2007, the following information was obtained about the purchase and usage of chemical XU377: Actual purchaselusage: Actual price: 14,050 litres £25,852 Because of fire risk and the danger to health, no inventories are held by the business. XU377 is only used in the manufacture of one product called P010. For the production of 2,500 litres of P010, the firm budgeted to use 100 litres of XU377 at a total budgeted cost of £196 (for the 100 litres). During April 2007, 318,750 litres of P010 were produced. Required: a) Calculate the price and efficiency variances for XU377 for April 2007. b) What is the point in flexing the budget in the context of variance analysis? Explain and discuss. c) Why are variance reports a useful tool of management? What are potential problems? Explain and discuss.

Name: ISOS Chemopro Ltd is producing a wide range of chemical products. It
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Description: ISOS Chemopro Ltd is producing a wide range of chemical products. It uses astandard costing system to record and monitor its purchases and usage of materials.For April 2007, the following information was obtained about the purchase andusage of chemi

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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