On the basis of a production/sales level of 10,000 units a month, the standard unit cost of
Question:
On the basis of a production/sales level of 10,000 units a month, the standard unit cost of a carton of Gimmet which sells for £12 is
£
Material: 12 kg at 50p 6.00 Labour: H hours at £1.60 2.40 Fixed overhead 0.60 The operating statement for November 1984 was as follows:
£ £ £
Budgeted profit 30,000 Add: Favourable variances Sales volume margin 1,500 Materials price 1,268 Wages efficiency 240 Fixed overhead volume 300 3,308 Less: Adverse variances Sales price 1,000 Material usage 400 Wages rates 780 Fixed overhead expenditure 200 2,380 Net favourable variance 928 Actual profit £30,928 Required:
(a) Produce an operating statement in conventional accounting form, i.e. showing a trading, profit and loss account.
(b) Explain what is meant by 'interdependence' of variances, illustrating your answer by references to the above statement.
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