- 20 Marks
MA – Mar 2025 – L2 – Q3 – Standard costing and variance analysis
Calculate sales volume variance for four distribution areas using a contribution income statement for Azumah Enterprise.
Question
a) The data below relates to Azumah Enterprise for the month of August. The data relates to activities for his four areas of distribution in Accra.
| Distribution Area | Selling Price Per Unit (GHc) | Standard Variable Cost Price Per Unit (GHc) |
|---|---|---|
| Awoshie (A) | 120 | 80 |
| Banana-Inn (B) | 100 | 60 |
| Cantonments (C) | 80 | 45 |
| Dansoman (D) | 45 | 25 |
| Sales Units | Budgeted | Actuals |
|---|---|---|
| Awoshie (A) | 65,000 | 48,000 |
| Banana-Inn (B) | 45,000 | 55,000 |
| Cantonments (C) | 35,000 | 28,000 |
| Dansoman (D) | 25,000 | 28,000 |
Required:
Estimate the sales volume variance for each distribution area and in total for the month using a contribution income statement.
b) There are many models of evaluation available to a Management Accountant. Benchmarking is one of such models.
Required:
Under what circumstances would benchmarking be an effective model of evaluating performance?
c) IFAC describes Environmental Management Accounting as “The management of environmental and economic performance via management accounting systems and practices that focus on both physical information on the flow of energy, water, materials, and wastes, as well as monetary information on related costs, earnings and savings.” The above quotation shows the increasing relevance of Environmental Management Accounting.
Required:
Discuss with examples FOUR categories of environmental costs.
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