Data Line 1 Line 2 Line 3 Line 4 Annual production |4000 3500 9800 675 Cost of direct materials $800 $650 |$1200$2500 Cost of direct labor $3500 $3750 $600 $320
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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.
Annual
(a) 1-2-3-4
(b) 3-1-2-4
(c) 3-2-1-4
(d) 3-4-1-2
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- Subject: Cost management & accounting Q.3 Compute Factory Cost:Direct Material = Rs. 50,000Conversion Cost = 150,000Prime Cost = 100,000 Q.4 Compute Factory Cost:Prime Cost = Rs. 250,000Direct Material = 100,000Conversion Cost = 380,000 Q.5 Compute: i) Prime Cost ii) Factory CostMaterial = Rs. 75,000 ( 80% Direct )Labour = 100,000 ( 20 % Indirect )Conversion Cost = 180,000 (Indirect Material and Labour are included)Particulars 2 units 4 units 8 units Direct Material @ $88000 per unit $176000 $352000 $704000 Direct Manufacturing labor @ $25 per labor hour $131750 = (5270 × $25) $224000 = (8960 × $25) $380800 = (15232 × $25) Variable Manufacturing Overheads Cost @ $15 per labor hour $79050 = (5270 × $15) $134400 = (8960 × $15) $228,480 = (15232 × $15) Total Variable Cost of Production $315655 $710400 $1313280Total Product J Product K Direct material cost $700,000.00 $400,000.00 $300,000.00 Overhead cost $280,000.00 $160,000.00 $120,000.00 Selling & Administrative $140,000.00 $80,000.00 $60,000.00 Full Cost $1,120,000.00 $640,000.00 $480,000.00 Profit (25% of full cost) $280,000.00 $160,000.00 $120,000.00 Sales $1,400,000.00 $800,000.00 $600,000.00 Selling price per unit $80.00 $60.00 Using the prices calculated above, how much profit would result if the sales were 5,000 units of J and 15,000 units of K instead of 10,000 units of each?
- Q-5. A company manufactures three products A, B, and C using the same equipment and processes. Data for the period is given below. C B A 20000 25000 2000 Production (units) $20 $20 $20 Sales price (per unit) $5 S10 $10 Material cost per unit hour Labour hours per unit hours hour Labour is paid at the rate of S5 per hour Overheads for the period were as follows: 90000 Set up costs 30000 Receiving 15000 Dispatch Machining 55000 $190000 Cost driver data: B Machine hours per unit 10 13 2 Number of set ups Number of deliveries received 2 20 20 20 Number of orders dispatched Required: 1.Calculate the cost per unit, absorbing all the overheads on the basis of labour hours. (5) 2. Calculate the cost per unit, absorbing the overheads on the basis of Activity based costing approach. (5)Q.5) Compute: i) Prime Cost ii) Factory CostMaterial = Rs. 75,000 ( 80% Direct )Labour = 100,000 ( 20 % Indirect )Conversion Cost = 180,000 (Indirect Material and Labour are included) Q.7) Compute: i) Direct Labour ii) Conversion Cost Factory Cost = Rs. 500,000Prime Cost = three-fifth of the Factory Cost.Direct Material = one-fifth of the Factory Cost.Subject: Cost management & accounting Q.1Direct Material = Rs. 50,000Direct Labour = 75,000Rent (Factory) = 5,000Fuel & Power = 2,000Rent (Office) = 3,000Utility (Factory) = 3,000Utility (Office) = 1,500Factory Supervisor Salary = 5,000Depreciation( Machines = 2,000Indirect Material = 10,000Indirect Labour = 5,000Compute: i) Prime Cost ii) Factory Over Head iii) Factory Cost iv) Conversion Cost
- Q15. A company manufacturing two products furnishes the following data Annual output: Product Output units Machine Hours Purchase Orders Machine set-ups A 5000 20000 160 20 B 60000 120000 384 44 Total 65000 140000 544 64 The annual overheads are as under. Rs Volume related activity costs 550,000 Set up related costs 820,000 Purchase related costs 618,000 Total 1,988,000 You are required to calculate the overheads cost per unit of each product A and B based on Activity based costing method.Subject: Cost management & accounting Q.9) Compute: i) Factory Overhead ii) Conversion CostPrime Cost = Rs. 600,000 which is 75% of Factory CostDirect Labour = 250,000Q.10) Compute: i) Factory Overhead ii) Conversion CostPrime Cost = Rs. 540,000 which is 60% of Factory CostDirect Labour = 240,000Hd.4. Manufacturing cost data for Salte Company are presented below. Case A Case B Case C Direct materials used (a) $65,600 $132,000 Direct labor $ 56,000 78,000 (g) Manufacturing overhead 48,500 81,900 103,000 Total manufacturing costs 196,650 (d) 263,900 Work-in-process, 1/1/12 (b) 14,500 (h) Total cost of work in process 224,500 (e) 325,000 Work-in-process, 12/31/12 (c) 8,000 70,000 Cost of goods manufactured 182,275 (f) (i) InstructionsIndicate the missing amount for each letter (a) through (c). CASE A ONLY.
- Question No.2 AJ manufacturing company produces about one hundred products. Its largest selling product is product X and its smallest is product Y. relevant data is given below: Particulars Products X Product Y Total Product Units produced per anum 5000 1000 50000 Material cost per unit Rs 1 Rs 1 Direct labor per unit 15 min 15 min Machine time per unit 1 hour 1 hour No of set ups per unit 24 2 500 No of purchase orders for material 36 6 2800 No of times material handled 200 15 12000 Direct labor cost per hour Rs 5.00 Overhead costs: Set up 280,000 Purchasing 145,000 Material handling 130,000 Machines 660,000 Total Machine hours are 600,000 hours 1,215,000 Required: Find out the production unit cost of product X and product Y. Using conventional product costing machine hour overhead absorption rate. Using ABC (Activity Base Costing ) compare the results of methods and comment.Question 3A product is manufactured by passing materials through two processes. Production costs for2021 January are as follows:Process A Process BDirect materials 4 000 kg @ $3.00 per kg 1 500 kg @ $2.50 per kgDirect labour $2 000 $1 500Overheads 100% of direct labour cost 125% of direct labour costThere is no beginning or ending work in progress inventory.Normal losses:Process A 10%Process B 5%Scrapped values:Process A $1.75 per kgProcess B $2.50 per kgOutput for 2021 January was:Process A 3 500 kgProcess B 5 050 kgA. Prepare Process A and Process B accounts. B. Prepare abnormal loss/gain accounts. C. Explain the term, equivalent units.Materials Php 65,000.00 (Php 15,000.00 is indirect) Labor Php 70,000.00 (Php 18,000.00 is indirect) Factory overhead Php 95,000.00 (including indirect materials and indirect labor) Unit Produced 1,000 Sold800 General and administrative expense Php 2,600.00 Office Salaries Php 18,600.00 4. Compute total period cost 5. If the selling price is Php 50.00 compute net