The following data is the cost information for company A over a period for output level of 10000units; direct materials-2kg @ GH¢5/kg, direct labour- 2hours @ GH¢20/hour, production overheads of GH¢40000, supervisors’ salary amounting to GH¢30000. The company also has a machine at cost of GH¢100000 to be used for ten years. The accountant identifies that one-third of supervisors’ salary varies with output levels whiles 60% of production overheads remains constant as output changes. Using the accounts classification method, the total variable and total fixed costs are A. GH¢570000 and GH¢45000 respectively B. GH¢526000 and GH¢45000 respectively C. GH¢526000 and GH¢54000 respectively D. GH¢570000 and GH¢40000 respectively
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 following data is the cost information for company A over a period for output level of 10000units; direct materials-2kg @ GH¢5/kg, direct labour- 2hours @ GH¢20/hour, production overheads of GH¢40000, supervisors’ salary amounting to GH¢30000. The company also has a machine at cost of GH¢100000 to be used for ten years. The accountant identifies that one-third of supervisors’ salary varies with output levels whiles 60% of production overheads remains constant as output changes. Using the accounts classification method, the total variable and total fixed costs are
A. GH¢570000 and GH¢45000 respectively
B. GH¢526000 and GH¢45000 respectively
C. GH¢526000 and GH¢54000 respectively
D. GH¢570000 and GH¢40000 respectively
The following information relates to a company selling 25000 pairs of shoes for a year; selling
price per unit- GH¢40, purchase cost per unit- GH¢25, fixed cost is made up of salariesGH¢100000, advertising- GH¢40000 and other fixed cost- GH¢100000. If a selling commission
of GH¢2 per pair was introduced, how many pairs should be sold to earn an after-tax profit of
GH¢12000 assuming a tax rate of 40%?
A. 30000units
B. 20000units
C. 15000units
D. 25000units
Consider the information below for a company whose products goes through two
material cost
cost as twice the cost of labour. The company expected an output of 9500kg from process 1 but
eventually obtained 9400kg. The actual output of 9400kg shows that A. There is an abnormal gain of 100kg
B. There is an abnormal loss of GH¢2632
C. Cannot determine without further details
D. A normal loss
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