B ) Budgeting and Standard Costing

B 1) The organization has a budgetary system and regularly compares the actual results with the budgeted figures.

For the month of February 2022, the following information was extracted from the books of the company.:

Budgeted Actual

Production in Units 3,000 3,500

Direct Materials 90,000 99,600

Direct Labour 48,000 55,200

Variable Manufacturing Overheads 6,000 9,000

Depreciation 2,000 2,000

Office Rent 3,000 3,000

Administrative Salaries 12,000 12,500

You are asked to prepare:

1) A Static Budget Report for the month of February 5 Marks

2) A Flexible Budget Report for the month of February. 5 Marks

B 2) The company also uses standard costing techniques and the following data has been provided for the month of February:

1) The standard cost to product one unit of product A includes 2 pounds of material at a standard cost of $ 4.00 per pound. During the month, 27,000 pounds of materials were purchased at a cost of $ 3.80 per pound and was used to produce 13,000 units of Product A

2) The standard labour cost to produce the unit includes 3 hours of work at an hourly rate of $ 10.00 per hour. For the month, 30,500 hours of labour are incurred at a cost of $ 10.10 per hour to produce 10,000 units.

You are asked to prepare reports showing:

a) The total materials Variance 2 Marks

b) The Price and Quantity materials Variance 3 Marks

c) The total Labour Variance 2 Marks

d) The Labour price and quantity Variance. 3 Marks