Advanced: Preparation of an operating control statement and the computation of labour, material and overhead variances

(a) A factory is planning to produce and sell 8000 units of product P during the next 4-week operating period. Its standard product unit and total costs are as follows:

You are required to discuss the manage¬ ment accounting problems which arise in attributing performance to managers in a manner which recognizes controllability.

Transcribed Image Text:

Costs per Total unit costs () () Direct material 1.111 units at 5.40/unit 6.00 48 000 Direct labour 0.6 hours at 5.00/hour 3.00 24000 Variable overhead 0.6 hours at 0.50/hour 0.30 2400 Fixed overhead 5.95 47 600 The product sells for 16.50/unit. The following details relate to the actual results for the 4-week period: