MANAGEMENT ACCOUNTING – Page 6

MA – L2 – Q24 – Standard costing and variance analysis

Calculate sales price variance for three products using actual and standard selling prices for TRK Limited.

Question

TRK Limited operates an absorption costing system and sells three products, B, R, and K, which are substitutes for each other. The following standard selling price and cost data relate to these three products:

Product	Selling price per unit	Direct material per unit	Direct labour per unit
B	GH₵14.00	3.00 kg at GH₵1.80 per kg	0.5 hrs at GH₵6.50 per hour
R	GH₵15.00	1.25 kg at GH₵3.28 per kg	0.8 hrs at GH₵6.50 per hour
K	GH₵18.00	1.94 kg at GH₵2.50 per kg	0.7 hrs at GH₵6.50 per hour

Budgeted fixed production overhead for the last period was GH₵81,000. This was absorbed on a machine hour basis. The standard machine hours for each product and the budgeted levels of production and sales for each product for the last period are as follows:

Product	B	R	K
Standard machine hours per unit	0.3 hrs	0.6 hrs	0.8 hrs
Budgeted production and sales (units)	10,000	13,000	9,000

Actual volumes and selling prices for the three products in the last period were as follows:

Product	B	R	K
Actual selling price per unit	GH₵14.50	GH₵15.50	GH₵19.00
Actual production and sales (units)	9,500	13,500	8,500

Required:
(a) Calculate the sales price variance for overall sales for the last period. (b) Calculate the sales volume profit variance for overall sales for the last period.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption costing, Product pricing, Sales price variance, Standard Costing, Variance analysis
Level: Level 2

Topic: Standard costing and variance analysis

MA – L2 – Q23 – Advanced Variance Analysis

Calculate total materials cost variance for Tamale Chemicals and analyze into price, usage, yield, and mix components for GreenLube production.

Question

Tamale Chemicals, based in Tamale, has the following standard cost for producing 9 litres of GreenLube:

5 litres of Material X at GH₵0.70 per litre
5 litres of Material Y at GH₵0.92 per litre.

There are no inventories of materials, and all material price variances relate to materials used. Actual results showed that 100,000 litres of materials were used during a particular period as follows:

45,000 litres of Material X: cost GH₵36,000
55,000 litres of Material Y: cost GH₵53,350

During the period, 92,070 litres of GreenLube were produced.

Required:
Calculate the total materials cost variance and analyse it into its price, usage, yield, and mix components.

Answer

Find Related Questions by Tags, levels, etc.

Topic: Advanced Variance Analysis

MA – L2 – Q22 – Standard Costing and Variance Analysis

Prepare an operating statement for Tarkwa Industries using standard absorption costing for Product Z, showing specific variances.

Question

Tarkwa Industries uses a standard absorption costing system. Standard data per unit of Product Z is as follows:

	GH₵ per unit	GH₵ per unit
Standard sales price		6.00
Direct labour cost	0.64
Direct material cost	3.00
Variable production overheads	0.16
		3.80
Contribution		2.20
Fixed overheads		0.20
Profit		2.00

The budgeted production and sales volume for Product Z was 12,000 units. Budget for 2,400 direct labour hours (12,000 units):

5 units to be produced per hour
Standard labour cost is GH₵3.20 per hour
Standard material cost is GH₵1.50 per kilogram and each unit requires 2 kilos
Budgeted fixed overheads GH₵2,400
Budgeted variable overhead cost per direct labour hour = GH₵0.80.

Actual results for the same period:

11,500 units were manufactured
2,320 direct labour hours were worked, and cost GH₵7,540
25,000 kilos of direct material were purchased (and used) at a cost of GH₵1.48 per kilogram.

Other information:

Inventory is valued at standard cost of production.
Actual variable overheads were GH₵1,750
Actual fixed overheads were GH₵2,462
10,000 units were sold for GH₵62,600.

Required:
Prepare operating statements for the period using:
(a) standard absorption costing.
To prepare the absorption costing operating statement, you should show the variable overhead expenditure and efficiency variances, and the fixed overhead expenditure and volume variances.

(b) standard marginal costing.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption costing, Budgeting, Labour variance, Material variance, Operating Statement, Overhead variance, Performance Analysis, Sales variance, Standard Costing, Variance analysis
Level: Level 2

Topic: Standard costing and variance analysis

MA – L2 – Q21 – Standard costing and variance analysis

Calculate material, labour, and overhead variances for Tarkwa Manufacturing Ltd. for Period 1 using standard absorption costing.

Question

Tarkwa Manufacturing Ltd., based in Kumasi, uses a standard absorption costing system in accounting for its production costs.
The standard cost of a unit of product is as follows:

	Standard quantity	Standard price/rate (GH₵)	Standard cost (GH₵)
Direct materials	5 kilos	6.00	30.00
Direct labour	20 hours	4.00	80.00
Variable production overhead	20 hours	0.20	4.00
Fixed production overhead	20 hours	5.00	100.00

The following data relates to Period 1:
Budgeted output: 25,000 units
Actual output – produced: 20,000 units
Units sold: 15,000 units
Materials put into production: 120,000 kilos
Materials purchased: 200,000 kilos
Direct labour hours paid: 500,000 hrs

Due to a power failure, 10,000 hours were lost.
Cost of materials used (120,000 kg): GH₵825,000
Rate per direct labour hour: GH₵5
Variable production overhead: GH₵70,000
Fixed production overhead: GH₵2,100,000

Required:
Calculate, for Period 1:

The material price variance
The material usage variance
The direct labour rate variance
The direct labour idle time variance
The direct labour efficiency variance
The variable overhead total cost variance
The fixed overhead expenditure variance
The fixed overhead volume variance
The total manufacturing cost variance

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption costing, Idle time, Labour variance, Manufacturing costs, Material variance, Overhead variance, Standard Costing, Variance analysis
Level: Level 2

Topic: Standard costing and variance analysis

MA – L2 – Q20 – Standard costing and variance analysis

Calculate material, labour, and overhead variances for South-East Enterprises' product EAGLE using standard costing data for July 20X8.

Question

The following data were extracted from South-East Enterprises’ records for July 20X8 in respect of product EAGLE:

Standard cost/unit


Raw material (50kg @ GH₵5 per kg)	250
Labour (2 hours @ GH₵60 per hour)	120

Budget
Production: 2,000 Units
Fixed overheads: GH₵1,500,000
Variable overheads: GH₵1,800,000
Labour hours: 4,000
Standard hours of production: 4,000

Actual
Production: 2,400 Units
Direct material purchased: 110,000 kg @ GH₵605,000
Opening inventory direct material: 1,000 kg
Closing inventory direct material: 4,000 kg
Wages paid (4,900 hours): GH₵318,500
Fixed overhead: GH₵1,650,000
Variable overhead: GH₵2,280,000

Required:
Compute the following variances:
(a) Material price variance
(b) Material usage variance
(c) Labour rate variance
(d) Labour efficiency variance
(e) Variable overhead expenditure variance
(f) Variable overhead efficiency variance
(g) Fixed overhead efficiency variance

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption costing, Labour variance, Manufacturing costs, Material variance, Overhead variance, Standard Costing, Variance analysis
Level: Level 2

Topic: Standard costing and variance analysis

MA – L2 – Q19 – Standard Costing and Variance Analysis

Calculate the direct material price variance for Zaytuna Enterprises' Eco Blocks.

Question

Zaytuna Enterprises operates a standard absorption costing system to control the manufacturing costs of its single product, “Eco Blocks”. The following standards have been set:

Description	Standard
Direct material	2 kgs at GH₵6/kg
Direct labour	1 hr at GH₵7/hr
Fixed overheads	GH₵9
Total production cost	GH₵28

The fixed overhead standard cost per unit is based on a budgeted monthly production of 4,000 units.
Actual results for the most recent month were:

Description	Actual
Production	4,300 units
Direct material cost	GH₵56,000 for 9,000 kgs
Direct labour cost	GH₵32,800 for 4,600 hours paid, only 4,000 hours were worked
Fixed overhead	GH₵35,000

No direct material inventories are held.

Required

Calculate the following variances:

(a) Direct material price

(b) Direct material usage

(d) Direct labour efficiency

(e) Idle time

(f) Fixed overhead expenditure

(g) Fixed overhead volume

(h) Fixed overhead capacity

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption costing, Labour variances, Manufacturing costs, Material variances, Overhead variances, Standard Costing, Variance analysis
Level: Level 2

Topic: Standard costing and variance analysis

MA – L2 – Q18- Standard Costing and Variance Analysis

Calculate the standard quantity of material used in production for GrainWorks Plc.

Question

GrainWorks Plc uses a standard costing system. Fixed production overhead is absorbed on the basis of direct labour hours. The following data relate to a particular period of operation:

Description	Value
Standard price of material/kg	GH₵45.90
Actual material issued to production	4,110 kg
Standard labour hours	1,680
Actual direct labour hours	1,760
Actual fixed overhead	GH₵45,620

The following variances were calculated at the end of the period:

Variance	Value
Direct material cost	GH₵702 (A)
Direct material usage	GH₵531 (F)
Direct labour efficiency	GH₵336 (A)
Direct labour cost	GH₵16 (F)
Fixed overhead cost	GH₵92 (F)

Required:
(a)(i) Calculate the standard quantity of material.

(ii) Calculate the actual price of material per kg.

(iii) Calculate the standard direct labour rate.

(iv) Calculate the actual direct labour rate.

(b) State TWO benefits to be obtained from the installation of a standard costing system.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Direct Labour, Fixed Overhead, Material Usage, Standard Costing, Variance analysis
Level: Level 2

Topic: Standard costing and variance analysis

MA – L2 – Q17- Standard costing and variance analysis

Reconcile actual and budgeted profit using variances for GreenLeaf Organics under marginal costing.

Question

GreenLeaf Organics, based near Tamale, makes a product – the EcoShield Spray. It is an organic alternative to chemical sprays.
For the forthcoming period, budgeted fixed costs were GH₵6,000, and budgeted production and sales were 1,300 units.
The EcoShield Spray has the following standard cost:

	GH₵
Selling price	50
Materials 5 kg × GH₵4/kg	20
Labour 3 hrs × GH₵4/hr	12
Variable overheads 3 hrs × GH₵3/hr	9

Actual results for the period were as follows:
1,100 units were made and sold, earning revenue of GH₵57,200.
6,600 kg of materials were bought at a cost of GH₵29,700, but only 6,300 kg were used.
3,600 hours of labour were paid for at a cost of GH₵14,220. The total cost for variable overheads was GH₵11,700, and fixed costs were GH₵4,000.
The company uses marginal costing and values all inventory at standard cost.

Required:
(a) Produce a statement reconciling actual and budgeted profit using appropriate variances.

(b) Assuming now that the company uses absorption costing, recalculate the fixed production overhead variances.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Labour variance, Marginal Costing, Material variance, Overhead variance, Profit reconciliation, Sales variance, Variance analysis
Level: Level 2

Topic: Standard costing and variance analysis

MA – L2 – Q16 – Budgetary control

Prepare a budgeted profit or loss statement for Kofi Limited for Q1, focusing on sales, inventory, and expenses.

Question

Kofi Limited retails fertilizer to farmers in Ghana. The company has approached its Bankers to provide funding for next year’s operations and a three-month master budget has been requested for review by the bankers.
You have been approached by the management as a consultant to prepare the 1st quarter budget for the banker’s consideration for its next year’s operations.
End of Accounting year December 20X9

	GH¢
Debtors	23,000
Bank balance	55,000
Non-current asset at cost	698,000
Provision for depreciation balance	98,000
Creditors Balance	48,000
Operating expenses for the month December	60,000
Sales for the month of December 20X9	400,000
December Ending inventory	20,000
Retained earnings	120,000

The following additional information was also provided to assist your work:
(i) Depreciation is provided at the rate of 5% on cost of non-current assets.
(ii) Closing inventory is expected to increase by GH¢2,000 in January from December levels. This is expected to increase by the same figure in February from the projected figure in January. It is expected that in March closing inventory is desired to be GH¢26,000.
(iii) The company makes a profit of 25% on its sales.
(iv) Operating expenses are expected to increase by 10% from that of December, and this is projected to increase at the same growth rate to March.
(v) Sales are projected to grow by 15% from December until March.
(vi) The Debtors figure is desired to be proportional to the sales values.
(vii) Creditors value for the three months are expected to be as follows: January – GH¢50,000; February – GH¢46,000; and in March – GH¢52,000.

You are required as a consultant for Kofi Company Limited to prepare for their Bankers:
(a) The budgeted statement of profit or loss for the three months.

(b) The budgeted statement of financial position for the three months.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeting, Cash Balance, Creditors, Debtors, Depreciation, Financial Planning, Financial Position, Inventory, Non-current Assets, Retained Earnings
Level: Level 2

Topic: Budgetary Control, Cash budgets and master budgets

MA – L2 – Q15 – Budgetary Control

Prepare a budgeted profit or loss statement for a medical practice near Mount Adaklu based on patient mix, treatment charges, and costs.

Question

A private medical practice based near Mount Adaklu has five full-time doctors, five full-time assistants, and two administrators.
Each doctor treats 18 patients each day on average. The medical centre is open for five days each week, 46 weeks each year.
Charges for patients vary according to the age of the patient and the nature of the treatment provided.

Charges

	Adults below 65 years of age	Children and individuals aged 65 years and over
No treatment: consultation only	GH¢50	GH¢30
Minor treatment	GH¢200	GH¢120
Major treatment	GH¢600	GH¢280

The patient mix and the treatment mix are as follows:
Patients:

Adults: 45%
Children: 25%
Over 65 years old: 30%

Treatment:

No treatment: 20%
Minor treatment: 70%
Major treatment: 10%

The salary of each doctor is GH¢240,000, assistants earn GH¢100,000, and administrators earn GH¢80,000. In addition, everyone receives a 5% bonus at the end of the year.
The medical practice expects to pay GH¢414,300 for materials next year and other (fixed) costs will be GH¢733,600.
Required:
Using the information provided, present a statement of profit or loss for the medical practice for next year. (Ignore the effects of inflation.)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeting, Cost allocation, Financial Performance, Medical Services, Operational Costs, Patient Mix, Profit or Loss, Revenue Calculation, Salary Costs
Level: Level 2

Topic: Budgetary Control

Subject (SQ): MANAGEMENT ACCOUNTING

Search

Filter by Professional Bodies

Filter by Subject

Filter by Topics

Filter by Levels

MA – L2 – Q24 – Standard costing and variance analysis

Calculate sales price variance for three products using actual and standard selling prices for TRK Limited.

MA – L2 – Q23 – Advanced Variance Analysis

Calculate total materials cost variance for Tamale Chemicals and analyze into price, usage, yield, and mix components for GreenLube production.

MA – L2 – Q22 – Standard Costing and Variance Analysis

Prepare an operating statement for Tarkwa Industries using standard absorption costing for Product Z, showing specific variances.

MA – L2 – Q21 – Standard costing and variance analysis

Calculate material, labour, and overhead variances for Tarkwa Manufacturing Ltd. for Period 1 using standard absorption costing.

MA – L2 – Q20 – Standard costing and variance analysis

Calculate material, labour, and overhead variances for South-East Enterprises' product EAGLE using standard costing data for July 20X8.

MA – L2 – Q19 – Standard Costing and Variance Analysis

Calculate the direct material price variance for Zaytuna Enterprises' Eco Blocks.

MA – L2 – Q18- Standard Costing and Variance Analysis

Calculate the standard quantity of material used in production for GrainWorks Plc.

MA – L2 – Q17- Standard costing and variance analysis

Reconcile actual and budgeted profit using variances for GreenLeaf Organics under marginal costing.

MA – L2 – Q16 – Budgetary control

Prepare a budgeted profit or loss statement for Kofi Limited for Q1, focusing on sales, inventory, and expenses.

MA – L2 – Q15 – Budgetary Control

Prepare a budgeted profit or loss statement for a medical practice near Mount Adaklu based on patient mix, treatment charges, and costs.

Our Offerings

Contact Info

My Account

Get In Touch

Subject (SQ): MANAGEMENT ACCOUNTING

Search

Filter by Professional Bodies

Filter by Subject

Filter by Topics

Filter by Levels

Calculate sales price variance for three products using actual and standard selling prices for TRK Limited.

You're reporting an error for "MA – L2 – Q24 – Standard costing and variance analysis"

Calculate total materials cost variance for Tamale Chemicals and analyze into price, usage, yield, and mix components for GreenLube production.

You're reporting an error for "MA – L2 – Q23 – Advanced Variance Analysis"

Prepare an operating statement for Tarkwa Industries using standard absorption costing for Product Z, showing specific variances.

You're reporting an error for "MA – L2 – Q22 – Standard Costing and Variance Analysis"

Calculate material, labour, and overhead variances for Tarkwa Manufacturing Ltd. for Period 1 using standard absorption costing.

You're reporting an error for "MA – L2 – Q21 – Standard costing and variance analysis"

Calculate material, labour, and overhead variances for South-East Enterprises' product EAGLE using standard costing data for July 20X8.

You're reporting an error for "MA – L2 – Q20 – Standard costing and variance analysis"

Calculate the direct material price variance for Zaytuna Enterprises' Eco Blocks.

You're reporting an error for "MA – L2 – Q19 – Standard Costing and Variance Analysis"

Calculate the standard quantity of material used in production for GrainWorks Plc.

You're reporting an error for "MA – L2 – Q18- Standard Costing and Variance Analysis"

Reconcile actual and budgeted profit using variances for GreenLeaf Organics under marginal costing.

You're reporting an error for "MA – L2 – Q17- Standard costing and variance analysis"

Prepare a budgeted profit or loss statement for Kofi Limited for Q1, focusing on sales, inventory, and expenses.

You're reporting an error for "MA – L2 – Q16 – Budgetary control"

Prepare a budgeted profit or loss statement for a medical practice near Mount Adaklu based on patient mix, treatment charges, and costs.

You're reporting an error for "MA – L2 – Q15 – Budgetary Control"

admin

Pick a Form