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A company has prepared the following standard cost card: $ Per unit Materials (4 kg at $4.50 per kg) 18 Labour (5 hrs at $5
A company has prepared the following standard cost card: | ||||||||
$ Per unit | ||||||||
Materials | (4 kg at $4.50 per kg) | 18 | ||||||
Labour | (5 hrs at $5 per hr) | 25 | ||||||
Variable overheads | (5 hrs at $2 per hr) | 10 | ||||||
Fixed overheads | (5 hrs at $3 per hr) | 15 | ||||||
Total | $68 | |||||||
Budgeted selling price | $75 per unit. | |||||||
Budgeted production | 8,700 units | |||||||
Budgeted sales | 8,000 units | |||||||
There is no opening inventory | ||||||||
The actual results are as follows: | ||||||||
Sales: | 8,400 units for | $613,200 | ||||||
Production: | 8,900 units with the following costs: | |||||||
Materials | (35,464 kg) | 163,455 | ||||||
Labour | (Paid 45,400hrs; worked 44,100 hrs) | 224,515 | ||||||
Variable overheads | 87,348 | |||||||
Fixed overheads | 134,074 | |||||||
a) Calculate variances, identify possible causes and recommend corrective action.
b) prepare an operating statement reconciling budgeted and actual results
c) Report findings to management in accordance with identified responsibility centers.
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