Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wool Mike and Sons Limited manufacture and sells one product. The company operates a standard costing system. Fixed overheads are absorbed on a labour hour

image text in transcribed

Wool Mike and Sons Limited manufacture and sells one product. The company operates a standard costing system. Fixed overheads are absorbed on a labour hour basis. The standard cost card for one unit is as follows: 2 meters at K2.00 per meter Labour 9.6 minutes at K 7.50 per hour Variable overheads K5 per hour Fixed overheads K10.50 per hour Budgeted selling price K 10.00 per unit The company budgeted for 4,800 labour hours for the coming period. The following were the actual results during this period: Actual production and sales 28,000 units. Actual sales revenue K 336,000 Actual quantity of wool bought 60,000 meters costing K 150,000 Actual direct labour hours worked 4,800 hours costing K 36,480 Actual variable overheads K 17,000 Actual fixed overheads K 40,000 Required: (a) Calculate all relevant variances in as much detail as possible. [20 marks) (b) Prepare an operating statement that reconciles the total budgeted profit to total actual profit for the period. (5 marks) (c) Write a detailed report to the Managing Director that evaluates the performance of the company during the period as shown by the variances you have calculated above. Your report should include possible corrective measures that the company should adopt, if any, to improve the future performance of the company. [15 marks) Total [40 marks) 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

AML Auditing Understanding Investment Banking

Authors: Bob Walsh

1st Edition

153959307X, 978-1539593072

More Books

Students also viewed these Accounting questions