standard marginal costing system and manufactures one product PIZZA for which

Standard marginal costing system and manufactures one

This preview shows page 12 - 15 out of 19 pages.

standard marginal costing system and manufactures one product,PIZZA, for which the following standard revenue and cost data perunit of product is available. Selling price GHS12.00Direct material A 2.5 kg at GHS1.70 perkgDirect material B 1.5 kg at GHS1.kg perkgDirect labour0.45hrs at GHS6.00 per hour.Fixed production overheads for the three month period wereexpected to be GHS62,500.Actual data for the three month period were as follows.Sales and production 48,000 units of PIZZA were producedand sold for GHS 580000Direct material A 121,951kg were used at a cost ofGHS200,000Direct material B 67,200kg were used at a cost ofGHS84,000Direct labour employee worked for 18,99 hours ,but 19,200 hrsWere paid at a cost of GHS117,120Fixed production overheads GHS64,000.Budgeted sales for the three month period were 50,000units ofproduct PIZZA.REQUIRED:a.Calculate the following variances;i.sales volume contribution varianceii.material price and usage variancesiii.labour rate, labour efficiency and idle time variances.
Image of page 12
COST FOR DECISION MAKING 1.(a) A ltd has been approached by a customer who would like a special job to be done for him and is willing to pay GH¢40,000.The job would require the following materials.MaterialTotal Units requiredUnits already instockBook value of units in stock GH¢ per unitRealizable value GH¢ per unitReplacementcost per unitP20000--6Q2000120022.55R2000140032.54S400400469The following information is provided:i)Material Q is used regularly by A ltd and if these stocks were required for the job, they would need to be replaced to meet other production demands.ii)Materials R and S are in stock because of previous over buying and they have a restricted use. No other use could be found for material R but the units of material S could be used in another job as substitute for 300 units of material T, which currentlycosts GH¢5 per unit (the company has no units in stock at the moment).What are the relevant cost of materials in deciding whether or not to accept the contract.b.The above contract above will requires 2 grades of labour; A and Bi)Grade A labour is currently idle, and has no work to do; however they are kept in full employment and paid their normal wage of GH¢3 per hour. The contract would require 500 hours of Grade A labour.ii)Grade B labour is currently extremely busy, and if the contract is undertaken, labour would be diverted from other work which currently earns a contribution to fixed overheads of GH¢4 per hour. The contract would require 200 hours of Grade B labour, which is paid GH¢3.5What are the relevant casts of labour .
Image of page 13
Image of page 14
Image of page 15

You've reached the end of your free preview.

Want to read all 19 pages?

  • Spring '20
  • Dr. ASRAVOR

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture