Interplast Ghana is a rubber fabricating company based at North Industrial Area. The company produce rubberbuckets for the West African market and plans to produce 1,000 units of buckets in the month of January. Thebucket requires a single operation and the standard cost for the operation is presented below:Standard cost card (bucket)GH₂Direct material (plastics): 10 kg at GHe 0.50 per kg)Direct labour (5hours@ GHe 20 per hours)Variable overheads (3 hours at GHe 2 per direct labour)Total standard variable costStandard contribution marginStandard selling priceBudget statement for the month of JanuarySales (1.000 units of buckets at GHe 140 per unit)Direct materials: (10,000 at GHe 0.50)Direct labour (4,000 hours @GHe 20per hour)Variable overheads (4,000 hours @GHe 2 per direct hour)93,000Budget contribution47,000Fixed overheads20,000Budgeted profit27,000The annual budgeted fixed overheads is GH€ 240,000 and are assume to be incurred evenly throughout theyear.Actual results for April are:5100611129140GH₂5,00080,0008000GH₂140,000 Variable overheads (4,000 hours @GHe 2 per direct hour)93,000Budget contribution47,000Fixed overheads20,000Budgeted profit27,000The annual budgeted fixed overheads is GH¢ 240,000 and are assume to be incurred evenly throughout theyear.Actual results for April are:GH¢GH₂Sales (800 units of buckets at GHe 150 per unit)120,000Direct materials: (9,000kg at GHe 0.60)Direct labour (3,500 hours @GHe 18 per hour)Variable overheads (3.500 hours @GHe 2.50 per direct hour)77,150Contribution42,850Fixed overheads18,000Profit24,850The production overheads are charged to production on the basis of direct labour hours. Actual production andsales are 800 units of buckets.You are require to calculate all the standard variances listed above and reconcile the results thereof.880005,40063,0008.750

Name: Interplast Ghana is a rubber fabricating company based at North Indus
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Description: Interplast Ghana is a rubber fabricating company based at North Industrial Area. The company produce rubberbuckets for the West African market and plans to produce 1,000 units of buckets in the month of January. Thebucket requires a single operation

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Variable overheads (4,000 hours @GHe 2 per direct hour) 93,000 Budget contribution 47,000 Fixed overheads 20,000 Budgeted profit 27,000 The annual budgeted fixed overheads is GHe 240,000 and are assume to be incurred evenly throughout the year. Actual results for April are: GHe GHe Sales (800 units of buckets at GHe 150 per unit) 120,000 Direct materials: (9,000kg at GHe 0.60) 8000 13 5,400

Variable overheads (4,000 hours @GHe 2 per direct hour) 93,000 Budget contribution 47,000 Fixed overheads 20,000 Budgeted profit 27,000 The annual budgeted fixed overheads is GHe 240,000 and are assume to be incurred evenly throughout the year. Actual results for April are: GHe GHe Sales (800 units of buckets at GHe 150 per unit) 120,000 Direct materials: (9,000kg at GHe 0.60) 8000 13 5,400

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

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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Question

Interplast Ghana is a rubber fabricating company based at North Industrial Area. The company produce rubber
buckets for the West African market and plans to produce 1,000 units of buckets in the month of January. The
bucket requires a single operation and the standard cost for the operation is presented below:
Standard cost card (bucket)
GH₂
Direct material (plastics): 10 kg at GHe 0.50 per kg)
Direct labour (5hours@ GHe 20 per hours)
Variable overheads (3 hours at GHe 2 per direct labour)
Total standard variable cost
Standard contribution margin
Standard selling price
Budget statement for the month of January
Sales (1.000 units of buckets at GHe 140 per unit)
Direct materials: (10,000 at GHe 0.50)
Direct labour (4,000 hours @GHe 20per hour)
Variable overheads (4,000 hours @GHe 2 per direct hour)
93,000
Budget contribution
47,000
Fixed overheads
20,000
Budgeted profit
27,000
The annual budgeted fixed overheads is GH€ 240,000 and are assume to be incurred evenly throughout the
year.
Actual results for April are:
5
100
6
111
29
140
GH₂
5,000
80,000
8000
GH₂
140,000

Variable overheads (4,000 hours @GHe 2 per direct hour)
93,000
Budget contribution
47,000
Fixed overheads
20,000
Budgeted profit
27,000
The annual budgeted fixed overheads is GH¢ 240,000 and are assume to be incurred evenly throughout the
year.
Actual results for April are:
GH¢
GH₂
Sales (800 units of buckets at GHe 150 per unit)
120,000
Direct materials: (9,000kg at GHe 0.60)
Direct labour (3,500 hours @GHe 18 per hour)
Variable overheads (3.500 hours @GHe 2.50 per direct hour)
77,150
Contribution
42,850
Fixed overheads
18,000
Profit
24,850
The production overheads are charged to production on the basis of direct labour hours. Actual production and
sales are 800 units of buckets.
You are require to calculate all the standard variances listed above and reconcile the results thereof.
8
8000
5,400
63,000
8.750

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