Standard Costing and Budgetary Control CA Past Years Exam Questions Question : 1 (Nov, 2008) UV Limited presents the following information for November. Calculate the cost Variances. Budgeted production of product P = 200 units. Standard consumption of raw materials = 2 kg per unit of P. Standard price of material A = ` 6 per kg. ly, 250 units of P were produced. Material A was purchased at ` 8 per kg and consumed at 1.8 kg per unit of P. Question : 2 (May, 2009) Following details relating to Product X during the month of April are available Standard cost per unit of X: Material : 50 kg at ` 40/kg Material price variance: ` 9,800 (adverse) production : 100 units Material usage variances : ` 4,000 (favourable) material cost: ` 42/kg Calculate the actual quantity of material used during the month of April. Question : 3 Nov, 2012) The standard labour employment and the actual labour engaged in a 40-hours week for a job are as under: Standard No. of Workers Wage per hour (`) No. of Workers Wage rate per hour (`) Skilled 65 45 50 50 Semi-skilled 20 30 30 35 Unskilled 15 15 20 10 Standard output 2,000 units, actual output 1,800 units, abnormal idle time 2 hours in the week. Calculate the labour cost variance, labour efficiency variance, and labour idle time variance. Question : 4 (May, 2012) SJ Limited has furnished the following information Standard overhead absorption rate per unit ` 20 Standard rate per hour ` 4 Budgeted production 15,000 units production 15,560 units hours ` 74,000 overheads were ` 2,95,000 of which ` 62,500 were fixed. Overheads are based on the following flexible budget. Production (Units) 8,000 10,000 14,000 Total overheads (`) 1,80,000 2,10,000 2,70,000 You are required to calculate the following overhead variances (on hours basis) with appropriate workings (i) Variable overhead efficiency and expenditure variance. (ii) Fixed overhead efficiency and capacity variance. Page No: 1.1
Question : 5 (Nov, 2009) The following information is available from the records of Vatika & Co for August. Calculate all Material and labour variances. Material purchased 24,000 kg (` 1,05,600) Standard rates and Prices are Material consumed 22,800 kg Direct material rate is ` 4.00 per unit. wages paid for 5,940 hours (`29,700) Direct labour rate is ` 4.00 per hour. Units produced 2,160 units Standard input is 10 kg for one unit. Standard requirement is 2.5 hours per unit. Question : 6 (Nov, 2007) KPR Limited operates a system of standard costing in respect of one of its products which is manufactured within a single cost centre. The Standard Cost Card of a product is as under: Direct material 5 kgs at ` 4.20 ` 21.00 Direct labour 3 hours at ` 3.00 ` 9.00 Factory overhead ` 1.20 per labour hour ` 3.60 Total Manufacturing Cost ` 33.600 The production schedule for the month of June, 2007 required completion of 40,000 units. However, 40,960 units were completed during the month without opening and closing work-in process inventories. Purchases during the month of June, 2007, 2,25,000 kgs of material at the rate of ` 4.50 per kg. Production and Sales records for the month showed the following actual results. Material Used 2,05,600 kgs Direct labour 1,21,200 hours, Cost incurred ` 3,87,840 Total factory overhead cost incurred ` 1,00,000 Required: (i) Calculate material variances based on consumption of material. (ii) Calculate labour variances and the total variance for factory overhead. Question :7(Nov, 2011) Gama limited has furnished the following data Standard cost data per unit of production cost data for august month Material: 10 kgs at ` 10 per kg Material used: 50,000 kg at a cost of ` 5,25,000 Labour: 6 hours at ` 5.50 per hour Labour paid ` 1,55,000 for 31,000 hours worked Variable OH: 6 hours at ` 10 per hour Variable OH: ` 2,93,000 Fixed OH: ` 4,50,000 per month Fixed OH: 4,70,000 (based on normal volume of 30,000 labour hours) production 4,800 units Calculate (1) Material Cost Variance, (2) Labour Cost Variance, (3) Fixed OH Cost Variance, (4) Variable OH Cost Variance. Question : 8 (May, 2014) XYZ Company Limited provides the following information: Standard Production 4,000 units 3,800 units Working days 20 21 Fixed overhead ` 40,000 ` 39,000 Variable overhead ` 12,000 ` 12,000 You are required to calculate following overhead variances: (a) Variable overhead cost variance (b) Fixed overhead expenditure variance (c) Fixed overhead volume variance Page No: 1.2
Question : 9 (Nov, 2010) Compute the sales variances (Total, Price and Volume) from the following figures: Product Budgeted Quantity Budgeted Price per Unit (`) Quantity Price per Unit (`) P 4,000 25 4,800 30 Q 3,000 50 2,800 45 R 2,000 75 2,400 70 S 1,000 100 800 105 Question : 10 (Nov, 2013) SP Limited produces a product Tempex. The standard cost cards per packet of Tempex are as follows: ` Direct materials 10 kg @ ` 45 per kg 450 Direct labour 8 hours @ ` 50 per hour 400 Variable overhead 8 hours @ ` 10 per hour 80 Fixed overhead 200 1,130 Budgeted output for the third quarter of a year was 1,000 packets. output is 900 packets. cost for this quarter are as follows: ` Direct materials 8,900 kg @ ` 46 per kg. 4,09,400 Direct labour 7,000 hours @ ` 52 per hour 3,64,000 Variable overhead incurred 72,500 Fixed overhead incurred 1,92,000 You are required to calculate: (i) Material Usage Variance (ii) Material Price Variance (iii) Material Cost Variance (iv) Labour Efficiency Variance (v) Labour Rate Variance (vi) Labour Cost Variance (vii) Variable Overhead Cost Variance (viii) Fixed Overhead Cost Variance Question : 11 (May, 2012) AK Limited produces and sells a single product. Sales budget for calendar year 2012 by quarters is as under Quarters I II III IV No. of units to be sold 18,000 22,000 25,000 27,000 The year is expected to open with an inventory of 6,000 units of finished products, and close with inventory of 8,000 units. Production in customarily scheduled to provide for 70% of the current quarter s sales demand plus 30% of the following quarter demand. Prepare quantity production budget for the year. Page No: 1.3
Question : 12 (RTP) Concorde limited manufactures two types of materials and one grade of labour. Shown below is an extract from the company s working papers for the next month s budget: Product A Product B Budgeted sales (in Units) 2,400 3,600 Budgeted materials consumption per unit (in kg): Material X 5 3 Material Y 4 6 Standard labour hours allowed per unit of product 3 5 Material X and Material Y cost ` 4 and ` 6 per kg and labures are paid ` 25 hour. Overtime premium is 50% and is payable, if a worker works for more than 40 hours a week. There are 180 direct workers. The target productivity (or Efficiency) Ratio for the productive hours worked by the direct works in actually manufacturing the products is 80%. In addition, the Non-Productive Down-Time is budgeted at 20% of the productive hours worked. There are four 5-Days weeks in the budgeted period and it is anticipated that sales and production will occur evenly throughout the whole period. It is anticipated that stock at the beginning of the period will be: Product A Product B Material X Material Y 400 units 200 units 1,000 kgs 500 kgs The anticipated closing stocks for the budget period are as below: Product A Product B Material X Material Y 4 days sales 5 days sales 10 days consumption 6 days consumption Prepare the material purchases budget and the wages budget for the direct workers, showing the quantities and values, for the next month. Question : 13 (May,2013) Pentax Limited has prepared its expenses budget for 20,000 units in its factory for a year detailed below: Particulars ` per unit Direct materials 50 Direct labour 20 Variable overhead 15 Direct expenses 6 Selling expenses (20% fixed) 15 Factory expenses (100% fixed) 7 Administration expenses (100% fixed) 4 Distribution expenses (85% variable) 12 Total 129 Prepare Expenses Budget for 15,000 units & 18,000 units Page No: 1.4
Question : 14 (May, 2002) The cost sheet of a company based on a budgeted volume of sales of 3,00,000 units per quarter is: Direct materials ` 5 per unit Factory overheads (50% fixed) ` 6 per unit Direct labour ` 2 per unit Selling and Administration OH (1/3 rd variable) ` 3 per unit The selling price is ` 18 per unit. When the budget was discussed, it was felt that the company would be able to achieve only a volume of 2,50,000 units of production and sales per quarter. The company therefore decided that an aggressive sales promotion campaign should be launched to achieve the following improved operations Proposal 1: sell 4,00,000 units per quarter by spending ` 2,00,000 on special advertising, in this case, the fixed OH will increase by ` 4,00,000 per quarter. Proposal 2: sell 5,00,000 units per quarter by reducing the selling price by ` 2 per unit on all sales, in this case, the variable selling an administration OH will increase by 5%, direct material cost will be reduced by 1% due to purchases price discounts and fixed factory costs will increase by ` 2,00,00,000 more. You are required to prepare flexible budget at 2,50,000, 4,00,000 and 5,00,000 units of output per quarter and calculate the profit at each of the above levels of output. Question : 15 (May,2009) Following is the sales budget for the first six months of a calendar year in respect of PQR limited Month Jan Feb March April May June Sales (units) 10,000 12,000 14,000 15,000 15,000 16,000 Finished goods inventory at the end of each month is expected to be 20% of budgeted sales quantity for the following month. Finished goods inventory was 2,700 units on 1 st January. There would be no WIP at the end of any month. Each unit of finished product requires material X: 4 kgs at ` 10/kg and material Y: 6 kgs at ` 15/kg Material on hand on 1 st January was 19,000 kgs of material X and 29,000 kgs of material Y. monthly closing stocks of material is budgeted to be equal to half of the requirements of next month s production. Budgeted direct labour hour per unit finished product is ¾ hour. Budgeted direct labour cost for the first quarter of the year is ` 10,89,000. data for the 1 st quarter ended on 31 st March is as under production quantity: 40,000 units Direct material cost (Purchase cost based on materials actually issued to production) Material X: 1,65,000 kgs at ` 1.0.20 per kg Material Y: 2,38,000 kgs at ` 15.10 per kg direct labour hours worked: 32,000 hours direct labour cost: ` 13,12,000 Required: 1. Prepare the following budgets 2. Compute the following variances (a) Monthly production quantity budget for the (a) Material cost variance, material price variance, months of January, February, March and April and material usage variance (b) Monthly raw material consumption quantity (b) Direct labour cost variance, direct labour rate budget from January to April variance, & direct labour efficiency variance (c) Materials purchase quantity budget for months of January, February and March Question : 16 (Nov,2007) Calculate efficiency and capacity ratio from the following figures: Budgeted production 80 units Standard time per unit 8 hours production 60 units hours worked 500 Page No: 1.5