Your company manufactures three products. Alpha. Beta and Gamma. The following information refers to next month: Alpha Beta Gamma Sales demand 50 150 200 Raw materials units GH¢ 100 GH¢ 150 GH¢ 100 Direct labor hours units 5 10 2 Fixed overheads units GH¢ 30 GH¢ 60 GH¢ 12 Direct labor is paid at GHc3.00 per hour. Variable overhead is equal to 10% of the cost of materials. Fixed overheads are absorbed to the products at the rate of 200% of the total direct labor cost. The selling price is calculated by doubling the prime cost (total direct cost) Required: 1. Calculate the contribution per unit for each product and rank them
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.
Your company manufactures three products. Alpha. Beta and Gamma. The following information refers to next month:
|
|
Alpha |
Beta |
Gamma |
|
Sales demand |
50 |
150 |
200 |
|
Raw materials units |
GH¢ 100 |
GH¢ 150 |
GH¢ 100 |
|
Direct labor hours units |
5 |
10 |
2 |
|
Fixed |
GH¢ 30 |
GH¢ 60 |
GH¢ 12 |
Direct labor is paid at GHc3.00 per hour. Variable overhead is equal to 10% of the cost of materials. Fixed overheads are absorbed to the products at the rate of 200% of the total direct labor cost. The selling price is calculated by doubling the prime cost (total direct cost)
Required:
1. Calculate the contribution per unit for each product and rank them
2. Using the ranking from the previous answer in (1). prepare a
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