Question: RJ Limited manufactures one standard product and operates a system of variance accounting using a fixed budget. As assistant management accountant, you are responsible for preparing the monthly operating statements. Data from the budget, the standard product cost and actual data for the month of October are given below. Budgeted and standard cost data: Budgeted sales and production Standard cost for each unit of product Material MM (15 kg at Rs. 2 per kg) Material NN (10 kg at Rs. 2.50 per kg) Direct wages (7.5 hours at Rs. 10 per hour) Variable production overhead (7.5 hours at Rs. 6 per hour) Fixed production overhead (80% of direct wages) Budgeted profit (20% of sales price) Budgeted sales price Actual data for the month of October: Production and sales 5,800 units at a price of Rs. 280 per unit. Direct materials MM consumed 90,000 kg at Rs. 1.90 per kg Direct materials NN consumed 55,000 kg at Rs. 2.70 per kg Direct wages incurred 45,000 hours at Rs. 10.80 per hour Variable production overhead incurred Fixed production overhead incurred Units 6,000 Rupees 30.00 25.00 75.00 45.00 60.00 235.00 58.75 293.75 Rs. 1,624,000 171,000 148,500 486,000 268,000 352,000 Required: Prepare operating statement along with all possible variances for the month of October under absorption costing. Prepare operating statement along with all possible variances for the month of October under marginal costing.
Question: RJ Limited manufactures one standard product and operates a system of variance accounting using a fixed budget. As assistant management accountant, you are responsible for preparing the monthly operating statements. Data from the budget, the standard product cost and actual data for the month of October are given below. Budgeted and standard cost data: Budgeted sales and production Standard cost for each unit of product Material MM (15 kg at Rs. 2 per kg) Material NN (10 kg at Rs. 2.50 per kg) Direct wages (7.5 hours at Rs. 10 per hour) Variable production overhead (7.5 hours at Rs. 6 per hour) Fixed production overhead (80% of direct wages) Budgeted profit (20% of sales price) Budgeted sales price Actual data for the month of October: Production and sales 5,800 units at a price of Rs. 280 per unit. Direct materials MM consumed 90,000 kg at Rs. 1.90 per kg Direct materials NN consumed 55,000 kg at Rs. 2.70 per kg Direct wages incurred 45,000 hours at Rs. 10.80 per hour Variable production overhead incurred Fixed production overhead incurred Units 6,000 Rupees 30.00 25.00 75.00 45.00 60.00 235.00 58.75 293.75 Rs. 1,624,000 171,000 148,500 486,000 268,000 352,000 Required: Prepare operating statement along with all possible variances for the month of October under absorption costing. Prepare operating statement along with all possible variances for the month of October under marginal costing.
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:
RJ Limited manufactures one standard product and operates a
system of variance accounting using a fixed budget. As assistant
management accountant, you are responsible for preparing the
monthly operating statements. Data from the budget, the
standard product cost and actual data for the month of October
are given below.
Budgeted and standard cost data:
Budgeted sales and production
Standard cost for each unit of product:
Material MM (15 kg at Rs. 2 per kg)
Material NN (10 kg at Rs. 2.50 per kg)
Direct wages (7.5 hours at Rs. 10 per hour)
Variable production overhead (7.5 hours at Rs. 6 per hour)
Fixed production overhead (80% of direct wages)
Budgeted profit (20% of sales price)
Budgeted sales price
Actual data for the month of October:
Production and sales 5,800 units at a price of Rs. 280 per unit.
Direct materials MM consumed 90,000 kg at Rs. 1.90 per kg
Direct materials NN consumed 55,000 kg at Rs. 2.70 per kg
Direct wages incurred 45,000 hours at Rs. 10.80 per hour
Variable production overhead incurred
Fixed production overhead incurred
Units
6,000
Rupees
30.00
25.00
75.00
45.00
60.00
235.00
58.75
293.75
Rs.
1,624,000
171,000
148,500
486,000
268,000
352,000
Required:
Prepare operating statement along with all possible variances for
the month of October under absorption costing.
Prepare operating statement along with all possible variances for
the month of October under marginal costing.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F548f144b-9127-46bb-ba4e-7cbbebe00421%2Fa1ebfb0f-f353-49a9-96ab-6ff54bbbd2f8%2Fytebhfa_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question:
RJ Limited manufactures one standard product and operates a
system of variance accounting using a fixed budget. As assistant
management accountant, you are responsible for preparing the
monthly operating statements. Data from the budget, the
standard product cost and actual data for the month of October
are given below.
Budgeted and standard cost data:
Budgeted sales and production
Standard cost for each unit of product:
Material MM (15 kg at Rs. 2 per kg)
Material NN (10 kg at Rs. 2.50 per kg)
Direct wages (7.5 hours at Rs. 10 per hour)
Variable production overhead (7.5 hours at Rs. 6 per hour)
Fixed production overhead (80% of direct wages)
Budgeted profit (20% of sales price)
Budgeted sales price
Actual data for the month of October:
Production and sales 5,800 units at a price of Rs. 280 per unit.
Direct materials MM consumed 90,000 kg at Rs. 1.90 per kg
Direct materials NN consumed 55,000 kg at Rs. 2.70 per kg
Direct wages incurred 45,000 hours at Rs. 10.80 per hour
Variable production overhead incurred
Fixed production overhead incurred
Units
6,000
Rupees
30.00
25.00
75.00
45.00
60.00
235.00
58.75
293.75
Rs.
1,624,000
171,000
148,500
486,000
268,000
352,000
Required:
Prepare operating statement along with all possible variances for
the month of October under absorption costing.
Prepare operating statement along with all possible variances for
the month of October under marginal costing.
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