The cost accountant of Faizan Manufacturing Co. has prepared the following summary: Inventories at 1st September 2003 Rs. Rs. Raw material………………………….. 40,000 Work in process…………………….. 12,000 Fuel……………………………….. 2,000 Factory Repair Parts………………… 2,800 Finished goods………………………. 14,000 70,800 Raw Material Purchased……………… 58,000 Fuel Purchases…………………………. 5,200 Direct labour………………………………….. 83,100 Misc. Factory overhead……………………….. 2,300 Repairs to factory……………………………….. 4,200 Depreciation of plant……………………………….. 2,700 Superintendence……………………………………. 1,200 Transportation out…………………………………. 1,100 Purchase discount lost……………………………. 800 Indirect factory labour……………………………. 2,000 Inventories at 30 September 2003 Raw material………………………….. 36,000 Work in process…………………….. 15,000 Fuel……………………………….. 3,400 Factory Repair Parts………………… 2,600 Finished goods………………………. 12,000 69,000 162,000 Required: A statement of cost of goods sold in proper format. Cost per unit manufactured if units are manufactured during the year are 12,000. Find out GP if sales are Rs.185,000.
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.
The cost accountant of Faizan Manufacturing Co. has prepared the following summary:
Inventories at 1st September 2003 Rs. Rs.
Raw material………………………….. 40,000
Work in process…………………….. 12,000
Fuel……………………………….. 2,000
Factory Repair Parts………………… 2,800
Finished goods………………………. 14,000 70,800
Raw Material Purchased……………… 58,000
Fuel Purchases…………………………. 5,200
Direct labour………………………………….. 83,100
Misc. Factory
Repairs to factory……………………………….. 4,200
Superintendence……………………………………. 1,200
Transportation out…………………………………. 1,100
Purchase discount lost……………………………. 800
Indirect factory labour……………………………. 2,000
Inventories at 30 September 2003
Raw material………………………….. 36,000
Work in process…………………….. 15,000
Fuel……………………………….. 3,400
Factory Repair Parts………………… 2,600
Finished goods………………………. 12,000 69,000
162,000
Required:
- A statement of cost of goods sold in proper format.
- Cost per unit manufactured if units are manufactured during the year are 12,000.
- Find out GP if sales are Rs.185,000.
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