Standard cost card
| $ | ||
| Materials | 2 kgs at $2 per kg | 4 |
| Labour | 3 hours at $5 per hour | 15 |
| Variable overhead | 3 hours at $1 per hour | 3 |
| Fixed overhead | 1 | |
| Standard cost of sales | 23 | |
| Profit per unit | 7 | |
| Sales price | 30 |
Additional information
| $ | ||
| Budgeted profit | 70,000 | |
| Sales volume variance (A) | 700 | |
| Sales price variance (F) | 49,500 |
Cost variances
| Fav | Adv | ||
| $ | $ | ||
| Materials | Price | 25,050 | |
| Usage | 60,400 | ||
| Labour | Rate | 6,640 | |
| Idle time | 1,000 | ||
| Efficiency (other) | 15,750 | ||
| Variable | Total | 7,850 | |
| Fixed overhead | Expenditure | 5,000 |
Actual labour paid = 33,200 hours × $5.20
Actual material purchased = 50,000 kgs
Actual fixed overhead = $15,000
Required:
Calculate the following:
(a) Actual units produced
(b) Actual price/kg of material
(c) Budget units produced
(d) Actual units sold
(e) Actual profit
Solution:
(a) Actual units produced
| $ | |
| Actual cost of labour (33,200 x 5.2) | 172,640 |
| Labour rate | (6,640) |
| Idle time | (1,000) |
| Efficiency | (15,750) |
| Standard cost of actual production | 149,250 |
| Standard labour cost/unit | 15 |
| Actual production (units) | 9,950 |
(b) Actual material price per kg
| $ | |
| Actual price (bal. fig.) | 2.501 |
| Standard price | 2.00 |
| 0.501 | |
| x actual purchases | 50,000 |
| Material price variance | 25,050 A |
(c) Budget production =
= (15,000 – 5,000) ÷ $1
= 10,000
(d) Actual units sold
| $ | |
| Actual sales level (bal. fig.) | 9,900 |
| Budget sales level | 10,000 |
| 100 | |
| x Standard profit/unit | 7 |
| Sales volume variance | 700 A |
(e) Actual profit
| $ | |
| Budget profit | 70,000 |
| Sales volume variance | (700) |
| Selling price variance | 49,500 |
| Cost variances | |
| Material | |
| Price | (25,050) |
| Usage | (60,400) |
| Labour | |
| Rate | (6,640) |
| Efficiency | (16,750) |
| Variable overhead | 7,850 |
| Fixed overhead | |
| Expenditure | (5,000) |
| Volume (W) | (50) |
| Actual profit | 12,760 |
Working
| Units | |
| Actual volume produced | 9,950 |
| Budget volume produced | 10,000 |
| 50 | |
| x Standard fixed overhead rate | $1 |
| Fixed overhead volume variance | $50 A |
