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Mukukulu Co. uses a variance analysis system to monitor its performance. In a certain month the following data applies: 1.4 tonnes of raw materials are
Mukukulu Co. uses a variance analysis system to monitor its performance.
In a certain month the following data applies:
- 1.4 tonnes of raw materials are needed at a cost of K60 per tonne
- It takes 2 labour hours of work to produce 1 tonne of finished product and labour is normally paid at K18 per hour. idle time is expected to be 10% of hours paid; this is nor reflected in the rate of K18 above.
- 2 hours of variable overhead at a cost of K30 per hour
- the standard selling price is K240 per tonne
- budgeted information for the month is
- Fixed costs were budgeted at K210,000 for the month,
- budgeted production and sales were 8,400 tonnes
- the actual results for the month were as follows:
- actual production and sales were 8,000 tonnes
- 12,000 tonnes of raw materials were bought and used, costing K660,000.00
- 15800 labour were paid for, costing K303,360
- 15000 labour hours were worked
- variable production overhead cost K480,000
- fixed costs were K200,000.00
- sales revenue achieved was K1,800,000.00
Required:
(a) Prepare a standard cost card
(b) Calculate the variances for the month in as much detail as the information allows.
(c) Prepare a statement reconciling budgeted profit to actual profit
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