STANDARD COSTING VARIANCE QUESTION – 1 Zincet Co, a manufacturing firm, operates a standard costing system. It makes a single product, ZIN, using a single raw material CET. Standard costs relating to ZIN have been calculated as follows. Standard cost schedule – ZIN Per unit (RM) Direct material, CET, 50 kg at RM15 per kg 750 Direct labour, 8 hours at RM10 per hour 80 Variable overhead, 8 hours at RM4 per hour 32 Total standard costs 862 The standard selling price of a ZIN is RM1,000 and Zincet Co produces 2,000 units a month. During October 2021, 1,800 units of ZIN were produced. Relevant details of this production are as follows: Direct material CET – 88,000 kg costing RM1,232,000 were bought and used. Direct labour – 14,000 hours were worked during the month and total wages were RM133,000. - Variable production overhead – The actual cost of the month was RM70,000. Inventories of the direct material CET are valued at the standard price of RM15 per kg. Each ZIN was sold for RM1,075. Required: Calculate the following for the month of October 2021. (a) Direct material cost variances, analysed into price and usage variances. (b) Direct labour cost variances, analysed into rate and efficiency variance. (c) Variable production overhead variances, analysed into expenditure and efficiency variance.
STANDARD COSTING VARIANCE QUESTION – 1 Zincet Co, a manufacturing firm, operates a standard costing system. It makes a single product, ZIN, using a single raw material CET. Standard costs relating to ZIN have been calculated as follows. Standard cost schedule – ZIN Per unit (RM) Direct material, CET, 50 kg at RM15 per kg 750 Direct labour, 8 hours at RM10 per hour 80 Variable overhead, 8 hours at RM4 per hour 32 Total standard costs 862 The standard selling price of a ZIN is RM1,000 and Zincet Co produces 2,000 units a month. During October 2021, 1,800 units of ZIN were produced. Relevant details of this production are as follows: Direct material CET – 88,000 kg costing RM1,232,000 were bought and used. Direct labour – 14,000 hours were worked during the month and total wages were RM133,000. - Variable production overhead – The actual cost of the month was RM70,000. Inventories of the direct material CET are valued at the standard price of RM15 per kg. Each ZIN was sold for RM1,075. Required: Calculate the following for the month of October 2021. (a) Direct material cost variances, analysed into price and usage variances. (b) Direct labour cost variances, analysed into rate and efficiency variance. (c) Variable production overhead variances, analysed into expenditure and efficiency variance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:STANDARD COSTING VARIANCE
QUESTION – 1
Zincet Co, a manufacturing firm, operates a standard costing system. It makes a single product,
ZIN, using a single raw material CET.
Standard costs relating to ZIN have been calculated as follows.
Standard cost schedule – ZIN
Per unit (RM)
Direct material, CET, 50 kg at RM15 per kg
750
Direct labour, 8 hours at RM10 per hour
80
Variable overhead, 8 hours at RM4 per hour
32
Total standard costs
862
The standard selling price of a ZIN is RM1,000 and Zincet Co produces 2,000 units a month.
During October 2021, 1,800 units of ZIN were produced. Relevant details of this production
are as follows:
Direct material CET – 88,000 kg costing RM1,232,000 were bought and used.
Direct labour – 14,000 hours were worked during the month and total wages were RM133,000.
Variable production overhead – The actual cost of the month was RM70,000.
Inventories of the direct material CET are valued at the standard price of RM15 per kg.
Each ZIN was sold for RM1,075.
Required:
Calculate the following for the month of October 2021.
(a) Direct material cost variances, analysed into price and usage variances.
(b) Direct labour cost variances, analysed into rate and efficiency variance.
(c)
Variable production overhead variances, analysed into expenditure and efficiency
variance.
(d) Selling price variance.
(e)
Sales volume contribution variance.
(f)
Variable production cost variance.
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