Standard Costing – Page 2

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

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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

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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

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

Topic: Standard costing and variance analysis

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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.

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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.

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MA – L2 – Q19 – 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"

MA – L2 – Q18- 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"

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