AC100_Lecture7-8_COMPLETE LECTURE SLIDES.pdf

Market share var note the level 3 and 4 sales

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Market share var. Note: The level 3 and 4 sales variances will not be examined in this course. They will be dealt with in detail in AC211 . 100
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Summary of variances Sales price: AQ (AP-SP) Sales cont’n volume: SC(AQ-SQ) Materials price: AQ(AP-SP) Materials efficiency: SP(AQ-SQ) Labour price: AH(AP-SP) Labour efficiency: SR(AH-SH) VO spending: AH(AP-SP) VO efficiency: SR(AH-SH) FO expenditure: Actl FO –Budget’d FO Key: S = Standard; A = Actual: Q: quanity; P = Price; C = Contribution; H = Hours; R: Rate 101
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The following are the ACTUAL results for Alpha Manufacturing Company for the month of April, a profitable month Alpha Manufacturing Company £ Sales 9,000 x £90 810,000 Less Direct Materials A 19,000kg x £11 209,000 B 10,100kg x £14 141,400 Direct Labour 28,500 hrs x £9.6 273,600 Var. overheads 52,000 Fix. overheads 116,000 Profit 18,000 Exercise Alpha Manufacturing (Management and Cost Accounting Colin Drury 8 th edition)
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Exercise Alpha Manufacturing (Management and Cost Accounting Colin Drury 8 th edition) A successful month no longer appears so successful when supplemented with the following budgeted information: Alpha Manufacturing Company Budget Budget Per unit Units 10,000 £ £ Sales £88/unit 88 880,000 Less Direct Materials A 20,000kg x £10 20 200,000 B 10,000kg x £15 15 150,000 Direct Labour 30,000 hrs x £9 27 270,000 Var. overheads 30,000 hrs x £2 6 60,000 Fix. overheads 12 120,000 Profit 8 80,000
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Materials price variance Have we paid more or less for direct materials than we thought? Actual price of actual usage compared with standard price of actual usage AQxAP - AQxSP AQ (AP-SP)
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Calculate the following variances for Alpha Manufacturing Materials A and B variances Labour variances VOH variances and FOH Expenditure variance
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AQ (AP SP) 19000 x (11-10) = 19000A Materials A price variance
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AQ (AP SP) 10,100 x (14-15) = 10,100F Materials B price variance
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Materials usage variance Have we used more or less direct materials than we thought? Standard price of actual usage compared with standard price of standard usage SPxAQ - SPxSQ SP(AQ-SQ)
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Materials A usage variance Budgeted number of units = 10,000 Budgeted material A usage = 20,000 kg Should use 2kg per unit (20,000 kg / 10,000 units) Actual output = 9,000 Should use = 9,000 x 2kg = 18,000 kg
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