Kranberry Networks Ltd had implemented a standard costing system to aid it in assessing the performance of its operations. In the first quarter of the current year, the company had the following variances: Direct materials price variance Direct materials quantity variance Direct labour rate variance £1,200 favourable £ 324 unfavourable £3,375 favourable £ 90 unfavourable Direct labour efficiency variance The following aditional information is provided for the first quarter: 4.00 kg £ 7.00 3.00 hours £ 8.25 £42,000 £37,125 Actual quantity of raw materials used per unit Actual cost of raw material per kg Actual time taken to manufacture one unit Actual wage rate per hour Actual cost of direct material purchased and used Actual direct wages paid The company hired a new supervisor in the beginning of the second quarter. Based on the supervisor's inputs, the company replaced faulty machines. The company has reskilled its labour workforce to bring in efficiency in its production process. The company's cost records for the second quarter of the year are given below: Actual quantity of raw materials used per unit Actual cost of raw material per kg Actual time taken to manufacture one unit 3.50 kg 6.50 2.50 hours Actual wage rate per hour Actual cost of direct material purchased and used Actual direct wages paid 8.50 £34,125 £ 31,875 Required: 1. Determine the following standards based on the variances and actual values provided for the first quarter. (a) Standard price per unit of raw material (Round your answer to 2 decimal places.)
Kranberry Networks Ltd had implemented a standard costing system to aid it in assessing the performance of its operations. In the first quarter of the current year, the company had the following variances: Direct materials price variance Direct materials quantity variance Direct labour rate variance £1,200 favourable £ 324 unfavourable £3,375 favourable £ 90 unfavourable Direct labour efficiency variance The following aditional information is provided for the first quarter: 4.00 kg £ 7.00 3.00 hours £ 8.25 £42,000 £37,125 Actual quantity of raw materials used per unit Actual cost of raw material per kg Actual time taken to manufacture one unit Actual wage rate per hour Actual cost of direct material purchased and used Actual direct wages paid The company hired a new supervisor in the beginning of the second quarter. Based on the supervisor's inputs, the company replaced faulty machines. The company has reskilled its labour workforce to bring in efficiency in its production process. The company's cost records for the second quarter of the year are given below: Actual quantity of raw materials used per unit Actual cost of raw material per kg Actual time taken to manufacture one unit 3.50 kg 6.50 2.50 hours Actual wage rate per hour Actual cost of direct material purchased and used Actual direct wages paid 8.50 £34,125 £ 31,875 Required: 1. Determine the following standards based on the variances and actual values provided for the first quarter. (a) Standard price per unit of raw material (Round your answer to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Kranberry Networks Ltd had implemented a standard costing system to aid it in assessing the performance
of its operations. In the first quarter of the current year, the company had the following variances:
Direct materials price variance
Direct materials quantity variance
Direct labour rate variance
Direct labour efficiency variance
£1,200 favourable
£ 324 unfavourable
£3,375 favourable
£ 90 unfavourable
The following additional information is provided for the first quarter:
Actual quantity of raw materials used per unit
Actual cost of raw material per kg
Actual time taken to manufacture one unit
Actual wage rate per hour
Actual cost of direct material purchased and used
Actual direct wages paid
4.00 kg
£ 7.00
3.00 hours
£ 8.25
£42,000
£37,125
The company hired a new supervisor in the beginning of the second quarter. Based on the supervisor's
inputs, the company replaced faulty machines. The company has reskilled its labour workforce to bring in
efficiency in its production process.
The company's cost records for the second quarter of the year are given below:
Actual quantity of raw materials used per unit
Actual cost of raw material per kg
Actual time taken to manufacture one unit
3.50 kg
6.50
2.50 hours
Actual wage rate per hour
Actual cost of direct material purchased and used
Actual direct wages paid
8.50
£ 34,125
£ 31,875
Required:
1. Determine the following standards based on the variances and actual values provided for the first
quarter.
(a) Standard price per unit of raw material (Round your answer to 2 decimal places.)
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