Compute direct materials price and quantity variances

Assignment Help Accounting Basics

Reference no: EM132218614

Question - Goodfans Ltd produces a single product that uses standard costing system to control its costs. The standard and actual costs data for the month of June to produce one unit of product is given below: Standard cost (BWP) Actual cost (BWP) Direct materials: Standard: 4.0kg at P7.20 per kg 28.80 Actual: 4.4 kg at P6.70 per kg 29.48 Direct labour: Standard: 1.6 hours at P9.00 per hour 14.40 Actual: 1.4 hours at P9.70 per hour 13.58 Variable Manufacturing overhead: Standard: 1.6 hours at P3.60 per hour 5.76 Actual: 1.4 hours at P4.30 per hour 6.02 Total cost per Unit 48.96 49.08 During the month of June, 4 800 units of product were produced. The comparison of standard and actual cost on the basis of total cost is given below: Actual Cost (4 800 units x P49.08) P235 584 Standard cost (4 800 units x P48.96) P235 008 Difference in cost (Unfavorable) P 576 Degree Assignment July - December MA221 Business Management Accounting Â©BOU 2018 Page 4 of 5 During the month, the company purchased 21,120 kilograms of materials from its supplier. There was no inventory of materials in stock at the start and at the end of month. You are required to:

1. Compute Direct Materials price and quantity variances.

2. Compute direct labor rate and efficiency variances.

3. Compute variable manufacturing overhead spending and efficiency variances.

4. The total cost variance of P576 is only 0.25% of P235 008 standard cost which means the company's costs are well under control. Do you agree? Explain.

5. What are possible causes of variances that you have computed?

Reference no: EM132218614

Questions Cloud

Record the preceding events in a horizontal statements model : Record the preceding events in a horizontal statements model. The first event for 2019 has been recorded as an example

What is being optimized in each of your examples : Explain the importance of correctly stating the objective function and constraints in linear optimization problems.

How would you go about recruiting for the position : Composing an effective and descriptive job announcement/advertisement is vital. The information included in the job announcement and the method of advertisement

Prepare a bank reconciliation : repare a bank reconciliation. A comparison of the checks written with the checks that have cleared the bank shows outstanding checks of $650

Compute direct materials price and quantity variances : Goodfans Ltd produces a single product that uses standard costing system to control its costs. Compute Direct Materials price and quantity variances

What is meant by a directional strategy : What is meant by a "directional strategy" for a health care organization? Provide some specific examples of directional strategies for your own health care.

Provide the journal entry that should be recorded : For each of the above situations, provide the journal entry that should be recorded as at December 31, 2017, under ASPE

What is the role of the national labor relations board : What are the historical foundations of the National Labor Relations Act (NLRA)? What is the role of the National Labor Relations Board (NLRB)?

How each article supports or refutes your research question : Explain how each article supports or refutes your research question and hypothesis. These articles will become part of your literature review for Unit 5.

User Account

All Pages