Determine the direct materials cost variance, Cost Accounting

Assignment Help:

Question

PART A

Borrico ltd manufacture a single product and they had currently introduced a system of budgeting and variance analysis.

The subsequent information is available for the month of July 2011:

1.

 

Budget

 

Rs

Actual

 

Rs

 

Direct materials

200,000

201,285

 

Direct labour

313,625

337,500

 

Variable manufacturing overhead

141,400

143,000

 

Variable sales overhead

64,400

69,500

 

Fixed manufacturing overhead

75,000

71,000

 

Administration costs

150,000

148,650

2. Standard costs were:

Direct labour 48,250 hours at $6.50 per hour

Direct materials 20,000 kg at $10 per kg

3. Actual manufacturing costs were:

Direct labour 50,000 hours at $6.75 per hour. Direct materials 18,900 kg at $10.65 per kg

4. Budgeted sales were 20,000 units at $50 a unit.

Actual sales were:

15,000 units at $52 a unit

5,200 units at $56 a unit

5. There was no work in progress or inventory of finished goods

Required:

(a) Determine the direct materials cost variance, direct materials usage variance and direct materials price variance.

(b) Evaluate the direct labour cost variance, direct labour efficiency variance and direct labour rate variance.

(c) What  use  can  the  management  of  Borrico  Ltd  make  of  the  variances calculated in (a) and (b) above.

PART B

XYZ company manufacture and market a specific product which they sell at $20 per unit. Current production is 400,000 units per month which represents 80% of capacity. They have the opportunity to utilize their surplus capacity by selling their product at Rs 13 per unit to an outside buyer.

Total costs for the last month were $5,600,000 of which $1,600,000 were fixed cost. This represented a total cost of $14 per unit.

Required:

Based on the provided financial information only, should XYZ company accept the order?

PART C

Describe the opportunity cost concept and why it is used in decision making.


Related Discussions:- Determine the direct materials cost variance

Absorbtion of overheads, interaction with an expert/cost accountant to kno...

interaction with an expert/cost accountant to know the overhead absorbtion policies and procedure followed

CORPORATE ACCOUNTING, I WENT TO MAKE ONE ASSIGNMENT CAN YOU GIVE ME QUOTE O...

I WENT TO MAKE ONE ASSIGNMENT CAN YOU GIVE ME QUOTE OR LINK TO SHARE ASSIGNMENT DETAIL

Job costing, XYZ Company is a family-owned bicycle manufacturing company lo...

XYZ Company is a family-owned bicycle manufacturing company located in Stow, Ohio. Until recently,it had maintained slow but steady growth in producing and marketing its only prod

What is emv and eol approach, Adele Weiss manages the campus flower shop. ...

Adele Weiss manages the campus flower shop. Flowers must be ordered three days in advance from her supplier in Mexico. Advance sales are so small that Weiss has no way to estimate

labour cost as the focus, Using  labour  cost  as  the  focus,  discus...

Using  labour  cost  as  the  focus,  discuss  the  differences  in  the measurement  of  labour efficiency / effectiveness where (i)  total quality management techniques and (ii)

Inventory systems, Find a journal article online about just-in-time invento...

Find a journal article online about just-in-time inventory systems. In the subject line of your post, include the title of the article that you read. Post a link to that article wi

Calculate the payback and discounted payback period, Lapsol limited manufac...

Lapsol limited manufacture electrical appliances for the export market. The management of the company are considering investing in one of two possible capital expenditure projects.

Prepare an income statement, Mrs. M. Botham is a sole trader, selling a var...

Mrs. M. Botham is a sole trader, selling a variety of fashionable clothing materials. Her business year end is 31 December 2011. You have been given the following trial balance

#title.payroll procedures., describe the procedures involved in payroll lab...

describe the procedures involved in payroll labour cost accounting

Determine the absorption rate of overheads, Determine the Absorption Rate o...

Determine the Absorption Rate of Overheads The budgeted production overheads and other budgeted data of compute are given as: Budget Overhead cost for the period = Ks

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd