Ravine Ltd determines the price of jobs using time and material pricing. Budgeted information relating to this accounting period is as follows: Labour rate, including on-costs 60 Annual labour hours 15,000 Annual overhead costs: Material handling and storage 151,680 Other overhead costs 546,000 Annual cost of materials used 1,264,000 Ravine Ltd adds a mark-up of $20 per hour on time charges, while no mark-up is added onto material costs. Required: Calculate the price for a job that requires 300 labour hours and $180,000 material cost. What would be the price of the job if Ravine Ltd also added a 10% mark-up on all material charges?
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.
Ravine Ltd determines the price of jobs using time and material pricing. Budgeted information relating to this accounting period is as follows:
|
Labour rate, including on-costs |
60 |
|
Annual labour hours |
15,000 |
|
Annual |
|
|
Material handling and storage |
151,680 |
|
Other overhead costs |
546,000 |
|
Annual cost of materials used |
1,264,000 |
Ravine Ltd adds a mark-up of $20 per hour on time charges, while no mark-up is added onto material costs.
Required:
- Calculate the price for a job that requires 300 labour hours and $180,000 material cost.
- What would be the price of the job if Ravine Ltd also added a 10% mark-up on all material charges?
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