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Assignment 3

The document contains 3 questions regarding standard costing variances. Question 1 asks to calculate all relevant variances and prepare an operating statement using data on actual and standard material and labor costs to produce 150 units of a product. Question 2 provides data on actual direct labor hours, units produced, and costs, as well as standard labor hours per unit and labor rate. It asks to calculate labor rate and efficiency variances, as well as variable overhead spending and efficiency variances. Question 3 provides standard material and labor costs per unit for bags produced, as well as actual material quantities and costs, labor hours and costs, and units produced. It asks to calculate material price and quantity variances, as well

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111 views

Assignment 3

The document contains 3 questions regarding standard costing variances. Question 1 asks to calculate all relevant variances and prepare an operating statement using data on actual and standard material and labor costs to produce 150 units of a product. Question 2 provides data on actual direct labor hours, units produced, and costs, as well as standard labor hours per unit and labor rate. It asks to calculate labor rate and efficiency variances, as well as variable overhead spending and efficiency variances. Question 3 provides standard material and labor costs per unit for bags produced, as well as actual material quantities and costs, labor hours and costs, and units produced. It asks to calculate material price and quantity variances, as well

Uploaded by

Zain-ul- Farid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Assignment 3

Question 1

Harry is a young skilled craftsman who produces decoration artifacts used by the event management
companies in marriage ceremonies. One its leading product is fluxco. The material and labour standard
cost (direct cost) card for producing one unit of Fluxco is:

$
Materials
20kg of material MOMO @ S 1.6 per kg 32
8kg of material POPO @ $ 4.3 per kg 34.4
Total 66.4
Labour
20 hours of Grade A labour at $ 1.20 per hour 24
30 hours of Grade B labour at $ 0.80 per hour 24
Total 48
Actual production was 150 units
Actual costs were:
Materials 2850kg of material MOMO costing 4,845
1224kg of material POPO costing 4,896
Total 9,741
Labour 3,030 hours of Grade A labour costing 3,939
4,200 hours of Grade B labour costing 3,780
Total 7,719
Actual material and labour cost of producing 150 units 17,460
Harry expects to sale 150 units at a price of $ 150. But only managed to sale 140 units at price of $155.
He uses marginal costing system for the production. The factory’s budgeted fixed cost are $ 1100 due to
small scale operation but in this current period due to inflation it has increased by 10%.

Required: Calculate all the relevant variances and prepare operating statement.
Question 2
Umair Electronics Inc., manufactures a video recording device. The following information has
been obtained from direct labor standards that the company has set for this device.

 Standard time to complete one unit: 24 minutes


 Standard direct labor rate: Rs12 per hour
During the month of June, 8,500 hours were worked and 20,000 units were manufactured. The
actual direct labor and variable manufacturing overhead costs incurred for the month of June
were as follows:

 Direct labor cost: Rs 98,600


 Variable manufacturing overhead cost: Rs 78,200
The budgeted variable manufacturing overhead rate of Umair Electronics Inc., was Rs 8.

Required:

Compute labor rate variance and labor efficiency variance for June.
Compute variable overhead spending and efficiency variances for June.

Question 3

Weber & Sons produces large size bags for the use of tourists. Company uses standard costing
system to control costs. The standards for materials and labor costs to manufacture 1 bag are as
follows:

 Direct materials: 7.2 lbs. @ $5 per lb.


 Direct labor: 0.4 hours @ $20 per hour

During the last month, P&G produced 2,500 large bags. 20,000 lbs. of direct materials were
purchased @ $4.8 per lb. There was no direct materials inventory at the beginning and at the end of
the month. 900 direct labor hours were recorded @ $24 per hour.

Required:

Compute direct materials price and quantity variance.


Compute direct labor rate and efficiency variance.

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