Question No. 3

1) During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows

Total direct labor cost 100,000 @10 per hour

Cost of Material used 70,000

The standards for one units of company product are as follows

Direct Labor Direct Material

- 3 hours required for one unit - 2 pounds of Material required for one unit

- Rate 24 per hour - Price 20 per pound

Required:

1. Compute the following

• Material variance
• Material quantity variance
• Material price variance

2) Being an accounting expert, elaborate that how standard costing system facilitates managerial planning, reduction in production costs and decision making. Use your analytical thinking to answer the question

3) HASF Glassworks makes glass flanges for scientific use Material cost Rs.10 per flange and the glass blowers are paid a wage rate of 100 per hours a glass blower blows 20 flanges in two hours. Fixed manufacturing costs for flanges are 25000 per period. other non-manufacturing cost associated with flanges are 10,000 per period and are fixed.

Required:

1. Find out variable cost per units and total fixed cost.
2. Assume Company manufactures and sells 10,000 flanges this period their competitor sells flanges for 15 each. can company sell below competitor price and make a profit on the flanges
3. How would be your answer to requirement 2 differ if company made and sold 20,000 flanges this period why