KPR Limited operates a system of standard costing in respect of one of its products which is manufactured within a single cost centre. The Standard Cost Card of a product is as under: Standard Unit cost ($) Direct material 5kgs @ $ 4.20 21.00 Direct labour 3 hours @ 3.00 9.00 Factory overhead $1.20 per labour hour 3.60 Total manufacturing cost 33.60 The production schedule for the month of June, 2019 required completion of 40,000 However, 40,960 units were completed during the month without opening and closing work progress inventories. Purchases during the month of June, 2019, 2,25,000 kgs of material at the rate of $ 4,50 per kg. Production and Sales records for the month showed the following actual results. Materials used 2,05,600 kgs ; Direct labour 1,21,200 hours; cost incurred $ 3,87,840 ; Total factory overhead cost incurred $ 1,00,000 ; Sales 40,000 units. Selling price to be so fixed as to allow a mark-up of 20 per cent on selling price. Required : (i) Calculate material variances based on consumption of material. (ii) Calculate labour variances and the total variance for factory overhead.

KPR Limited operates a system of standard costing in respect of one of its products which is manufactured within a single cost centre. The Standard Cost Card of a product is as under: Standard Unit cost ($) Direct material 5kgs @ $ 4.20 21.00 Direct labour 3 hours @ 3.00 9.00 Factory overhead $1.20 per labour hour 3.60 Total manufacturing cost 33.60 The production schedule for the month of June, 2019 required completion of 40,000 However, 40,960 units were completed during the month without opening and closing work progress inventories. Purchases during the month of June, 2019, 2,25,000 kgs of material at the rate of $ 4,50 per kg. Production and Sales records for the month showed the following actual results. Materials used 2,05,600 kgs ; Direct labour 1,21,200 hours; cost incurred $ 3,87,840 ; Total factory overhead cost incurred $ 1,00,000 ; Sales 40,000 units. Selling price to be so fixed as to allow a mark-up of 20 per cent on selling price. Required : (i) Calculate material variances based on consumption of material. (ii) Calculate labour variances and the total variance for factory overhead.

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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