Selling price: £7.50 per unit Direct materials: Paper 125 pages @ £0.005 per page Plastic 0.075 kg @ £6 per kg Direct labour: Compilers 0.25 hours @ £8 per hour Finishers 0.15 hours @ £9 per hour Production and sales 5,000 units Fixed costs £2,000 The actual number of units produced and sold in September was 4,800 and the following actual cost data is available: £ Sales 35,760 Direct materials: Paper (125 pages per unit) (3,600) Plastic (0.09 kg per unit) (2,808) Direct labour Compilers (£7.80 per hour) (7,488) Finishers (£9.10 per hour) (5,897) Fixed costs (2,100) Net profit 13,867 The senior manager is happy that actual net profit is higher than budgeted net profit, but would like to understand the reasons behind this increase and has asked the manager of the Daily Planner department to explain her results. Prepare a flexible budget for September 20X2 Prepare a reconciliation of budgeted profit and actual profit, calculating all relevant price, cost and efficiency variances.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Selling price: £7.50 per unit Direct materials: Paper 125 pages @ £0.005 per page Plastic 0.075 kg @ £6 per kg Direct labour: Compilers 0.25 hours @ £8 per hour Finishers 0.15 hours @ £9 per hour Production and sales 5,000 units Fixed costs £2,000
The actual number of units produced and sold in September was 4,800 and the following actual cost data is available: £ Sales 35,760 Direct materials: Paper (125 pages per unit) (3,600) Plastic (0.09 kg per unit) (2,808) Direct labour Compilers (£7.80 per hour) (7,488) Finishers (£9.10 per hour) (5,897) Fixed costs (2,100) Net profit 13,867
The senior manager is happy that actual net profit is higher than budgeted net profit, but would like to understand the reasons behind this increase and has asked the manager of the Daily Planner department to explain her results.
Prepare a flexible budget for September 20X2
Prepare a reconciliation of budgeted profit and actual profit, calculating all relevant price, cost and efficiency variances.
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