7. X Ltd makes a single product and uses standard marginal costing. The standard cost data...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
7. X Ltd makes a single product and uses standard marginal costing. The standard cost data for the product are: Standard cost data per unit € Selling price 175 Direct materials (8 kgs at €2) Direct labour (4 hours at €5) Variable overhead (4 hours at €15) Marginal costs The average product volume per period is 500 units but during Period 5 only 450 units were made and sold. At the end of the period the following variance statement was prepared. 16 20 60 96 Results for Period 5 Budget (500 units) Actual Variance (450 units) € Sales 87,500 83,250 4,250 A Less: marginal cost Direct 8,000 (3,690 kgs used) 7,650 350 F materials 10,000 (1,840 hours worked) 8,100 1,900 F Direct labour Variable 30,000 28,350 1,650 F overheads Marginal cost Contribution 48,000 39,500 44,100 39,150 24,650 350 A Less: 350 F fixed costs 25,000 14,500 Profit 14,500 After studying the above report, the General Manager expressed surprise that all the cost variances were favourable as he understood that there had been some production problems. Furthermore, the Sales manager had told him that he had been able to make some excellent sales during the period which seemed at odds with the statement. Required: (a) To reconcile budgeted contribution to actual contribution with the use of flexible budgeting approach, adjust for fixed costs and disclose the actual profit; (10 marks) (b) To write a report, briefly explaining the difference between the revised presentation in (a) and the original statement. (10 marks) (c) The General Manager mentions that he has seen an article stating that standard costing is becoming less useful in modern factories. He is puzzled by this and wonders whether the company should stop using the technique. You are required to prepare a reply to the General Manager explaining what the article refers to, and giving your opinion on whether standard costing should continue to be used within the company. 7. X Ltd makes a single product and uses standard marginal costing. The standard cost data for the product are: Standard cost data per unit € Selling price 175 Direct materials (8 kgs at €2) Direct labour (4 hours at €5) Variable overhead (4 hours at €15) Marginal costs The average product volume per period is 500 units but during Period 5 only 450 units were made and sold. At the end of the period the following variance statement was prepared. 16 20 60 96 Results for Period 5 Budget (500 units) Actual Variance (450 units) € Sales 87,500 83,250 4,250 A Less: marginal cost Direct 8,000 (3,690 kgs used) 7,650 350 F materials 10,000 (1,840 hours worked) 8,100 1,900 F Direct labour Variable 30,000 28,350 1,650 F overheads Marginal cost Contribution 48,000 39,500 44,100 39,150 24,650 350 A Less: 350 F fixed costs 25,000 14,500 Profit 14,500 After studying the above report, the General Manager expressed surprise that all the cost variances were favourable as he understood that there had been some production problems. Furthermore, the Sales manager had told him that he had been able to make some excellent sales during the period which seemed at odds with the statement. Required: (a) To reconcile budgeted contribution to actual contribution with the use of flexible budgeting approach, adjust for fixed costs and disclose the actual profit; (10 marks) (b) To write a report, briefly explaining the difference between the revised presentation in (a) and the original statement. (10 marks) (c) The General Manager mentions that he has seen an article stating that standard costing is becoming less useful in modern factories. He is puzzled by this and wonders whether the company should stop using the technique. You are required to prepare a reply to the General Manager explaining what the article refers to, and giving your opinion on whether standard costing should continue to be used within the company.
Expert Answer:
Answer rating: 100% (QA)
Answer a Particulars Per unit Budgeted 500 units Actual 450 units Sales 78750 83250 Less Marginal Co... View the full answer
Related Book For
Accounting For Managers Interpreting Accounting Information for Decision Making
ISBN: 978-1119979678
4th edition
Authors: Paul M. Collier
Posted Date:
Students also viewed these accounting questions
-
Following are the annual cost data for a tomato press. Year Cash Flow 0.................-$210,000 1.....................88,000 2.....................68,000 3.....................62,000...
-
The following cost data for the year just ended pertain to Heartstrings, Inc., a greeting card manufacturer: Service department costs * ............... $ 50,000 Direct labor: wages .....................
-
The following cost data for the current year relate to Heartstrings Pty Ltd, a greetings card manufacturers Required: Calculate each of the following costs for the year: 1. Total prime costs. 2....
-
Show that the rectangular box (including the top and bottom) with fixed volume V = 27 m 3 and smallest possible surface area is a cube (Figure 25). X y Z
-
Derive the integral property of the Laplace transform: X(s) 1
-
In a particular bag of skittles, there are 9 red, 9 orange, 9 green, 13 yellow, and 14 purple skittles. Give the indicated probability: Enter your answer as a fraction or w/o rounding 1.Selecting a...
-
Indicate whether the following statements, a through \(g\), are better indicators of (1) lean manufacturing, (2) flexible manufacturing, or (3) both lean and flexible manufacturing. a. A central...
-
Consumption of alcoholic beverages by young women of drinking age in the United Kingdom, the United States, and Europe was reported (The Wall Street Journal, February 15, 2006). Data (annual...
-
A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing her returns to the return on the MSCI World...
-
On January 5, 2019, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise scheduled for June 30, 2019. The customer...
-
Which of the following statements about replication is true? O a. During replication in oukaryotes, nucleosomes dissociate and are reformed entirely from newly synthesized histones Ob. Replication...
-
As teachers, we all see opportunities for improvement in teaching and learning. To construct a meaningful solution requires clear identification of a specific problem or issue. In this assignment,...
-
Ash owns the real property known as Blueacre. Misty owns the real property known as Redacre. In order to get the Ash's property, Ash must drive over Misty's property. Hence Ash has an express...
-
Up to this point in the course, you have seen the use of access control lists (ACLs) in many applications. For example, ACLs have been used for distribute lists with OSPF, configuring NAT, and with...
-
9) A firm sells two types of golf clubs. Its most recent annual sales consisted of $2,500,000 of "Premiums" and $4,000,000 of "Budgets." The firm is considering adding a third line of golf clubs (the...
-
public interface Filter { } boolean accept (int value); (a) Write a method that, given an array of ints and a Filter, counts the number of elements that are rejected (i.e., the values for which...
-
Question # 3: David is buying a house for $256,000. To obtain the mortgage, David is required to make a 20% down payment. David obtains a 30-year mortgage with an interest rate of 6.15%. a.)...
-
Describe a job you have had in the past or a job you are very familiar with. Indicate the negative aspects of the job and how it could be improved with current human resource management techniques.
-
Opening stock is 350,000. Closing stock is 325,000. Purchases are 650,000. Sales are 1,000,000. The cost of sales is: d) 675,000
-
Calculate the following ratios: Return on investment (ROI) Return on capital employed (ROCE) Operating margin Gross margin Sales growth Working capital to sales Gearing Asset turnover
-
Management has asked you to prepare a variance report and reconcile the budget and actual result. Management believes that a flexible budget may be helpful in understanding the variances.
-
After factory overhead has been applied to work in process, what does a credit balance in Factory Overhead indicate?
-
Explain the difference between actual factory overhead and applied factory overhead.
-
To which work sheet column is the debit balance of Cost of Goods Sold extended?
Study smarter with the SolutionInn App