A) Pan and Cook Ltd operates a large bakery at the AnC shopping center. The company employs a standard costing system. T
Posted: Mon May 02, 2022 7:01 am
A) Pan and Cook Ltd operates a large bakery at the AnC shopping
center. The company employs a standard costing system. The expected
production for January 2021 for its flagship large size sponge cake
was 150, but in February the figures show a production and sales of
120 large size sponge cakes for January. The actual costs for
January were 380 labour hours (at a cost of GHS 8,360); Fixed
overhead of GHS 5,000; 1,150 kg of materials (at a cost of GHS
2,875). Only 90% of direct materials were used in production, while
5% of direct labour constituted idle time. As a manager you know
the following standards:
Materials: 10 kg at GHS 3/kg
Labour: 4 hours at GHS 20/hour
Fixed overhead: GHS 40/ unit
Required:
i). Calculate both the price and quantity variances for
materials, labour and overhead.
ii). Indicate who you would interview to learn more about the
labour variance and state any three (3) reasons why such person
should be interviewed
iii. State four factors that a company would need to consider
before deciding whether to investigate a variance.
iv. State and explain four differences between standard costing
and budgetary control.
center. The company employs a standard costing system. The expected
production for January 2021 for its flagship large size sponge cake
was 150, but in February the figures show a production and sales of
120 large size sponge cakes for January. The actual costs for
January were 380 labour hours (at a cost of GHS 8,360); Fixed
overhead of GHS 5,000; 1,150 kg of materials (at a cost of GHS
2,875). Only 90% of direct materials were used in production, while
5% of direct labour constituted idle time. As a manager you know
the following standards:
Materials: 10 kg at GHS 3/kg
Labour: 4 hours at GHS 20/hour
Fixed overhead: GHS 40/ unit
Required:
i). Calculate both the price and quantity variances for
materials, labour and overhead.
ii). Indicate who you would interview to learn more about the
labour variance and state any three (3) reasons why such person
should be interviewed
iii. State four factors that a company would need to consider
before deciding whether to investigate a variance.
iv. State and explain four differences between standard costing
and budgetary control.