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6,000 52. Activity. Price Recovery and Productivity Variances RTP, M 09 ABC Led manufactures three types of products. The production process requires a single input raw material, a single type of direct labour and a single energy input, Electricity. Overheads are shared by all three products. Budgeted details of the three products are shown below - Product 3 1 2. Labour Hours per unit 0.20 0.25 0.40 Material kg per unit 1.0 1.1 1.3 Kilowatt Hours per unit (kwhr) 0.5 0.6 0.8 Budgeted Sales in units 10,000 2,000 Forecasted Price * 15 7 20 40 The Committed Fixed Overheads are expected to cost 80,000 per period and the unit costs for the input resources are as follows - Labour -20 per hour, Material - 4 per kg, Energy - 6 per kilowatt-hour. The actual results for the concerned budgeted period are given below - Sales 3,85,000 Less. Labour 1.09,452 Materials 96 448 Energy 61.671 Variable Costs 2,67,571 Committed Overhead 84,000 Net Profit 33,429 Additional information regarding inputs and outputs during the concemed period are provided to you below - Outputs Inputs Product Quantity Price Description Quantity Price Product 1 12,000 * 16 Labour 5,212 hours 21.00 Product 2 5,500 * 22 Materials 21,920 kg 7.4.40 Product 3 1,800 740 Energy 10,633 kwhr 5.80 From the above, calculate the Standard Margin (Contribution) and subsequently compute the following variances in order to reconcile Budgeted Profits and Actual Profits - (1) Sales - Activity Variance, (2) Price - Recovery Variance, (3) Productivity Variance. 5. Material Purchase Price Variance-Accounting under Single Plan RTP (adapted) Gamtand Company uses a Standard Cost System. The standard for each Finished Unit of product allows for 3 kgs of plastic at 22 per kg. During December, Garland bought 4,500 kgs of plastic at 0.75 per kg, and used 4,100 kgs in the production of 1300 finished units of product. What is the Material Purchase Price Variance for the month of December? Give journal entries. & Performance Evaluation - CA Final 28. Reconciliation of Contribution - Marginal Costing Approach Global Limited uses standard and marginal costing system. It provides the following details for a financial year relating to its M03 (Modified), M 09 Production, Cost and Sales: Particulars Budget (in )(for 24,000 units) Actual (in) (25,600 units) Sales Value 6,000 6,784 Materials 960 1,080 Labour 1,440 1,664 Variable Overheads 2,400 2,592 Total Variable Cost 4,800 5,336 The Sales Budget is based on the expectation of the Company's estimate of Market Share of 12%. The entire industry's sales of the same product for the year is 2,40,000 units. Further details are as follows - Particulars Standard (in) Actual (in) 8.00 7.50 Material Price per kg. 6.00 6.40 Labour Rate per hour Required: 1. Compute Market Size Variance and Market Share Variance. 2. Prepare a statement reconciling the Budgeted Contribution with Actual Contribution on the basis of important Material Variances, Labour Variances, Variable Overhead Variances and Sales Variances. tations 27. Reconciliation with Percentage Comparisons RST Ltd has provided the following summarized results for two years: M 14 Particulars for the year ended R in Lakhs) Year 1 Year 2 Sales 3,000 3,277.50 Material 2,000 2,357.50 Variable Overheads 500 525.00 Fixed Overheads 300 367.50 Profit 200 During Year 2, Sale Price has increased by 15% whereas Material and Overheads prices have increased by 15% and 5% respectively. You are required to analyse the variances of revenue and each element of Cost over the year in order to bring out the reasons for the change in Profit. Present a Profit Reconciliation Statement starting from Profits in Year 1 showing the factors responsible for the change in Profit in Year 2. 27.50 8 -Z 12. Material, Labour, VOH and FOH Variance Computation Sunglow Limited manufactures and sells a single product. From the records of the Company the following information is available for a month. The Standard Cost comprises the following - Unit Particulars 320 Direct Material -X 24 1,600 -Y 16 400 2,400 1,600 Direct Wages R 40 per hour) 400 Variable Overhead (25% of Direct Wages) 600 Fixed Overhead (based on budgeted production of 10,000 units of the Final Product per month) Total 5,000 The Budgeted Selling Price is 7,500 each and the Budgeted Sales for the month were 14,000 units. The following were the transactions for the month: Direct Material Units Purchase Price per unit Issued Units 44,000 42 82,400 Y 1,40,000 71 2,46,400 60.000 24 1,64,000 Direct Wages: 290,00,000 (3,98,000 hours) Overheads: Variable 2,00,000, Fixed 73,00.000 Production: 11,000 Units Sales: 9,000 units at 2 700 each and 3,500 units at 750 each. = II 13. Labour and VOH Variances M08 The following data has been extracted from the books of Guru Enterprises which is using Standard Costing system - Actual Output 9,000 units Direct Wages paid 1,10,000 hrs at 22 ph of which 5,000 hours, being idle time, were not recorded in production Standard Hours 10 hours per unit Labour Efficiency Variance 3,75,000 (A) Standard Variable OH 150 per unit Actual Variable OH 16,00,000 Compute - (a) Idle Time Variance, (b) Total VOH Variance, (c) VOH Expenditure Variance, (d) VOH Efficiency Variance. Wage Rate Per Hour = = = Time (Gross) Efficiency Variance = 13,50,000 - 16,50,000 3,00,0 Total VOH Cost Variance = { 13,50,000 -16,00,000 = 2,50,000 A N 10 14. VOH, FOH Cost Variances and Budget Ratios A Company is engaged in manufacturing of several products. The following data have been obtained from the record of a machine shop for an average month - Budgeted Actual data for August are - No. of working days 24 Overheads Fixed 78,800 Variable 8 Working hours per day 70,870 No. of Direct workers 150 Net Operator Hours worked 20,500 Efficiency One Standard Hour per Clock Hour Standard Hours produced 22,550 Down time 10% There was a special holiday in August. Overheads Fixed 75,400 Variable 90,720 Required: 1. Calculate Efficiency, Activity, Calendar and Standard Capacity Usage Ratio. 2. Calculate all the relevant Fixed Overhead Variances. 3. Calculate Variable Overheads Expenditure and Efficiency Variance