Q.2 Standard costs and Variance analysis Kasule was hired as a budget analyst at a large manufacturing business. His bos
Posted: Mon May 30, 2022 7:58 am
Q.2
Standard costs and Variance analysis
Kasule was hired as a budget analyst at a large manufacturing
business. His boss has asked that he reviews last year's master
budget, actual results, and planned numbers, and calculate the
variances for each category. The data table Kasule was given
follows;
Actual Results
Standard
Units Sold
$20,000
$24,000
Revenues
$2,500,000
$2,880,000
Total Variable Costs
$1,900,200
$2,112,000
Contribution Margin
$599,800
$768,000
Fixed Costs
$570,000
$552,000
Operating Income
$29,800
$216,000
Required;
Total
Per Unit of Product
Direct materials
$35,490
$18.20
Direct labor
$7,020
3.60
Variable manufacturing overhead (based on direct
labor-hours)
$2,340
1.20
$23.00
During April, the factory worked only 760 direct labor-hours and
produced 2,000 robes. The following actual costs were recorded
during the month:
Total
Per Unit of Product
Direct materials (6,000 yards)
$36,000
$20
Direct labor
$8,000
$4
Variable manufacturing overhead
$3,800
$2
$26
At standard, each robe should require 2.8 yards of material. All
of the materials purchased during the month were used in
production.’
Compute the following variances for April:
Standard costs and Variance analysis
Kasule was hired as a budget analyst at a large manufacturing
business. His boss has asked that he reviews last year's master
budget, actual results, and planned numbers, and calculate the
variances for each category. The data table Kasule was given
follows;
Actual Results
Standard
Units Sold
$20,000
$24,000
Revenues
$2,500,000
$2,880,000
Total Variable Costs
$1,900,200
$2,112,000
Contribution Margin
$599,800
$768,000
Fixed Costs
$570,000
$552,000
Operating Income
$29,800
$216,000
Required;
Total
Per Unit of Product
Direct materials
$35,490
$18.20
Direct labor
$7,020
3.60
Variable manufacturing overhead (based on direct
labor-hours)
$2,340
1.20
$23.00
During April, the factory worked only 760 direct labor-hours and
produced 2,000 robes. The following actual costs were recorded
during the month:
Total
Per Unit of Product
Direct materials (6,000 yards)
$36,000
$20
Direct labor
$8,000
$4
Variable manufacturing overhead
$3,800
$2
$26
At standard, each robe should require 2.8 yards of material. All
of the materials purchased during the month were used in
production.’
Compute the following variances for April: