Ell Basic variance analysis. 46 mins

Transcription

1 ~-~ , unit of product L requires 9 active labour hours for completion. The performance standard for product L allows for ten per cent of total labour time to be idle, due to machine downtime. The standard wage rate is $9 per hour. What is the standard labour cost per unit of product L? $72.90 $81.00 $89.10 $90.00 (Total = 14 marks) Ell asic variance analysis. 46 mins 21.1 company manufactures a single product L, for which the standard material cost is as follows. $ per unit Material 14 kg x $3 42 uring July, 800 units of L were manufactured, 12,000 kg of material were purchased for $33,600, of which 11,500 kg were issued to production. SM o values all inventory at standard cost. The material price and usage variances for July were: Price $2,300 (F) Usage $900 () $2,300 (F) $300 () $2,400 (F) $900 () $2,400 (F) $840 () --,-----, The following information relates to questions 21.2 and 21.3 company expected to produce 200 units of its product, the one, in 20X3. In fact 260 units were produced. The standard labour cost per unit was $70 (10 hours at a rate of $7 per hour). The actual labour cost was $18,600 and the labour force worked 2,200 hours although they were paid for 2,300 hours What is the direct labour rate variance for the company in 20X3? $400 (l $2,500 () $2,500 (F) $3,200 () 21.3 What is the direct labour efficiency variance for the company in 20X3? $400 () $2,100 (F) $2,800 () $2,800 (F) 21.4 Extracts from a company's records from last period are as follows. Production Variable production overhead cost Labour hours worked udget 1,925 units $11,550 5,775 The variable production overhead variances for last period are: ctual 2,070 units $14,904 8,280 Expenditure Efficiency $1,656 (F) $2,070 () $1,656 (F) $3,726 () $1,656 (F) $4,140 (1\) $3,354 () $4,140 () 80

2 , ',,',~ : 21.5 company has budgeted to make and sell 4,200. units of produ6t>x'du~tngt{e!"period. The standard fixed overhead cost per unit is $4. uring the period covered by the budget, the actual results were as follows. Production and sales Fixed overhead incurred The fixed overhead variances for the period were. c Fixed overhead expenditure variance $700 (F) $700 (F) $700 () $700 (). Fixed overhead volume vetience $3,200 (F) $3,200 () $3,200 (F) $~,200 (): 5,000 units $17, company manufactures a single product, and relevant data for ecember is as follows. Production units Labour hours Fixed production overhead udget/standard 1,800 9,000 $36,000 The fixed production overhead capacity and efficiency variances for ecember are: ctual 1,900 9,400, $39,480 apacity Efficiency $1,600 (F) $400 (F) $1,600 () $400 () $1,600 () $400 (F) $1,600 (F) $400 () (2 marks} 21.7 Which of the following would help to explain a favourable direct labour efficiency variance? 1 Employeeswere of a lower skill level than specified in the standard 2 etter quality material was easier to process. 3 Suggestionsfor improved working methods were implemented during the period 1,2and3 1 and 2 only 2 and 3 only 1 and 3 only 21.8 Which of the following statements is correct? o n adverse direct material cost variance will always be a combination of an adverse material pncevarlance and an adverse material usagevariance n adverse direct material cost variance will always be a combination of an adverse material price variance and a favourable material usage variance n adverse direct material cost variance can be a combination of a favourable material price variance and a favourable material usagevariance n adverse direct material cost variance can be a combination of a favourable material price variance and an adverse material usagevariance The following information relates to Questions 21.9 and company has a budgeted material cost of $125,000 for the production of 25,000 units per month. Each unit is budgeted to use 2 kg of material. The standard cost of material is $2.50 per kg. ctual materials In the month cost $136,000 for 27,000 units and 53,000 kg were purchased and used. 81

3 21.9 What was the adverse material price variance? $1,000 $3,500 $7,500 $11,000 1 I I What was the favourable material usage variance? $2,500 $4,000 $7,500 $10,000 :!~ :' The following information relates to questions and company operating a standard costing system has the following direct labour standards per unit for one of its products: 4 hours at $12.50 per hour r: I::,.1! i Last month when 2,195 units of the product were manufactured, the actual direct labour cost for the 9,200 hours worked was $110, What was the direct labour rate variance for last month? $4,250 favourable $4,250 adverse $5,250 favourable $5,250 adverse What was the direct labour efficiency variance for last month? $4,250 favourable $4,250 adverse $5,250 favourable $5,250 adverse!'i, \ j The follow; ng information relates to labour costs for the past month: udget Labour rate Production time Time per unit Production units ctual Wages paid Production Total hours worked There was no idle time What were the labour rate and efficiency variances? Rate variance $26,000 adverse $26,000 adverse $36,000 adverse $36,000 adverse Efficiency variance $25,000 favourable $10,000 favourable $2,500 favourable $25,000 favourable $10 per hour 15,000 hours 3 hours 5,000 units $176,000 5,500 units 14,000 hours 82

4 21.14 manufacturing company operates a standard absorption costing sys~el'rt, :I!astmonth 25,.000. production hours were bjjdgeted and the budgeted fixed production overhead costwas $125,000. Last month th~ atual hours worked were :24,()d 0and the standard hours for actual production were 27,000. What Wasthe trxed production overhead capaity varlance for last rnontht $5,000 dverse $5,000 Favourable $10,000 dverse. $10,000 Favourable The: followilig information relates to questions to Number of units produced.. Oir~, o:ra.t~~ials,..:.<. irect latjour Variable ove'ihead.. 2,200 l~vdget.. fi6~6oh. 286,000 isz.ooo The actual number of units produced was 2, WhatW8S the total direct materials variance? 2,000 Mt4al,.,. iio~ooo. 280, ,000 $10,000 dverse $10,000 Favourable $11,000 dverse..-', '.. ",' What was the total direct labour variance? [) $6,000 Favourable $20,000 dverse $22,000 Favourable What was the total direct variable overheads variance? $12,000 Favourable $12,000 dverse $11 ;000 dverse Which of the following statements are true? 1 favourable fixed overhead volume capacity variance occurs when actual hours of work are greater than budgeted hours of work 2 labour force that produces 5,000 staridard hours of work in 5,500 actual hours will give a. favourable fixed overhead volume efficiency variance. 1 is true and 2 is false oth are true oth are false 1 is false and 2 is true 83

5 """ : Which of the following statements are true? 1 The fixed overhead volume capacity variance represents part of the over/under absorption of overheads company works fewer hours than budgeted. This will result in an adverse fixed overhead volume capacity variance 8 o 1 is true and 2 is false oth are true oth are false 1 is false and 2 is true (Total = 38 marks). Em Further variance analysis 53 mins 22.1 company currently uses a standard absorptiot'i costing system. The fixed overhead variances extracted from the operating statement for November are:. $ Fixed productiori overhead expenditure variance Fixed production overhead capacity variance Fixed production overhead efficiency variance 5,800 adverse. 4,200 favourable 1,400 adverse PQ Limited is considering using standard marginal costing as the basis for variance reporting in future. What variance for fixed production overhead would be shown in a marginal costing operating statement for November? No variance would be shown for fixed production overhead Expenditure variance: $5,800 adverse Volume variance: $2,800 favourable Total variance: $3,000 adverse 22.2 Which of the following situations is most likely to result in a favourable selling price variance? The sales director decided to change from the planned policy of market skimming pricing to one of market penetration pricing. 8 Fewer customers than expected took advantage of the early payment discounts offered. ompetitors charged lower prices than expected, therefore selling prices had to be reduced in order to compete effectively. emand for the product was higher than expected and prices could be raised without adverse effects on sales volumes. : I' :!:" The following information relates to questions 22.3 to 22.6 company manufactures a single product. n extract from a variance control report together with relevant standard cost data is shown below. Standard selling price per unit Standard direct material cost (5kg x $2 per kg) udgeted total material cost of sales udgeted profit margin ctual results for February Sales revenue Total direct material cost irect material price variance irect material usage variance There was no change in inventory levels during the month. $70 $10 per unit $2,300 per month $6,900 per month $15,200 $2,400 $800 adverse $400 favourable 84