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Unformatted text preview: Problem Data: Actual quantity of materials purchased and used = 5,200 kg Actual price for materials purchased = $4.80 per kg Actual product produced = 2,400 units Standard price / cost = $5 (2kg per unit) Standard quantity of materials used for products produced = 4,800kg (2,400 x 2kg) Actual Quantity x Actual Price Actual Quantity x Standard Price Standard Quantity x Standard Price (AQ) x (AP) 5,200 x $4.80 $24,960 (SQ) x (SP) 4,800 x $5.00 $24,000 (AQ) x (SP) 5,200 x $5.00 $26,000 Price Variance $24,960 - $26,000 = $1,040 F Quantity Variance $26,000 - $24,000 = $2,000 U Total Variance $24,960 - $24,000 = $960 U Problem Data: Actual direct labour hours worked = 9,500 hours Actual rate of pay = $9.50 per hour Actual product produced = 2,400 units Standard rate of pay = 4hours at the rate of $9 per unit Standard quantity of labour hours used for products produced = 9,600 hrs. (2,400 x 4hrs.) Actual Hours x Actual Rate Actual Hours x Standard Rate Standard Hours x Standard Rate (AH) x (AR) 9,500 x $9.50 $90,250 (SH) x (SR) 9,600 x $9.00 $86,400 (AH) x (SR) 9,500 x $9.00 $85,500 Price Variance $90,250 - $85,500 = $4,750 U Quantity Variance 85,500 - $86,400 = $900 F Total Variance $90,250 - $86,400 = $3,850 U 29 ( Normal Standard Capacity Hours Hours Allowed lem Data: Normal capacity (in hours) = 10,000 al overhead incurred: Variable, $72,000; Fixed, $38,300. al product produced = 2,400 units dard labour hours per unit = 4 dard quantity of direct labour hours for units produced = 9,600 hrs. (2,400 x 4hrs.) able budget for overhead $ 76,800 (9,600 x $8) ble budget for overhead: Fixed (Budgeted) 40,000 (10,000 * $4) $116,800 Controllable Variance Actual Overhead Overhead Budgeted for Standard Hours Allowed = Variable $76,800 + Fixed $40,000 = $116,800 $6,500 F $110,300 Overhead Volume Variance Fixed Overhead Rate Normal Capacity Hours Standard Hours Allowed = x (10,000 9,600) $1,600 U $4 Standard Costs and Balanced Scorecard Standards and Budgets (READ) In concept, standards and budgets are essentially the same. Both are pre-determined costs and both contribute significantly to management planning and control. a. A standard is a unit amount, whereas a budget is a total amount. b. Standard costs may be incorporated into a cost accounting system. Why Standard Costs? (READ) Standard costs offer the following advantages to an organization: a. They facilitate management planning. b. They promote greater economy by making employees more "cost- conscious." c. They are useful in setting selling prices. d. They contribute to management control by providing a basis for the evaluation of cost control. e. They are useful in highlighting variances in management by exception....
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- Spring '09