) Appiah Company is a manufacturer of office desks. It uses a standard absorption costing system to monitor performance of managers and departments. A standard absorption cost card for one of its models, the Premium, is given below. GH¢ GH¢ Selling price 320 Production costs: Direct material (12 metres @ GH¢ 2.50 per metre) 30 Direct labour (5 hours @ GH¢ 7.00 per hour) 35 Variable overhead (5 hours @ GH¢ 20.00 per hour) 100 Fixed overhead (5 hours @ GH¢ 15.00 per hour) 75 240 80 Budgeted production and sales are 1,200 Premium per month. Actual results for the production and sale of Premium office desks for the most recent month were as follows. Sales 1,400 office desks @ GH¢ 300 each Production 1,500 office desks Direct material (purchased and used) 18,200 metres @ GH¢ 2.20 per metre Direct labour (worked and paid) 6,000 hours at GH¢ 7.00 per hour Variable overheads GH¢ 125,000 Fixed overheads GH¢ 102,000 There were no opening inventories of finished goods. Required Determine the variance for the following: i) Direct material price ii) Direct material usage iii) Direct labour rate
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
a) Appiah Company is a manufacturer of office desks. It uses a standard absorption costing system to monitor performance of managers and departments. A
GH¢ GH¢
Selling price 320
Production costs:
Direct material (12 metres @ GH¢ 2.50 per metre) 30
Direct labour (5 hours @ GH¢ 7.00 per hour) 35
Variable overhead (5 hours @ GH¢ 20.00 per hour) 100
Fixed overhead (5 hours @ GH¢ 15.00 per hour) 75 240
80
Budgeted production and sales are 1,200 Premium per month.
Actual results for the production and sale of Premium office desks for the most recent month were as follows.
Sales 1,400 office desks @ GH¢ 300 each
Production 1,500 office desks
Direct material (purchased and used) 18,200 metres @ GH¢ 2.20 per metre
Direct labour (worked and paid) 6,000 hours at GH¢ 7.00 per hour
Variable overheads GH¢ 125,000
Fixed overheads GH¢ 102,000
There were no opening inventories of finished goods.
Required
Determine the variance for the following:
i) Direct material price
ii) Direct material usage
iii) Direct labour rate
iv) Direct labour efficiency
v) Variable overhead expenditure
4
vi) Variable overhead efficiency
vii) Fixed overhead expenditure
viii) Sales volume (in terms of profit)
ix) The aim behind a balanced scorecard is to provide a comprehensive framework for translating a company’s strategic objectives into a coherent set of performance measures. It allows managers to look at the business from four (4) different perspectives.
Required
State and briefly explain the four different perspectives of the balance score card.
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a) Appiah Company is a manufacturer of office desks. It uses a standard absorption costing system to monitor performance of managers and departments. A standard absorption cost card for one of its models, the Premium, is given below.
GH¢ GH¢
Selling price 320
Production costs:
Direct material (12 metres @ GH¢ 2.50 per metre) 30
Direct labour (5 hours @ GH¢ 7.00 per hour) 35
Variable overhead (5 hours @ GH¢ 20.00 per hour) 100
Fixed overhead (5 hours @ GH¢ 15.00 per hour) 75 240
80
Budgeted production and sales are 1,200 Premium per month.
Actual results for the production and sale of Premium office desks for the most recent month were as follows.
Sales 1,400 office desks @ GH¢ 300 each
Production 1,500 office desks
Direct material (purchased and used) 18,200 metres @ GH¢ 2.20 per metre
Direct labour (worked and paid) 6,000 hours at GH¢ 7.00 per hour
Variable overheads GH¢ 125,000
Fixed overheads GH¢ 102,000
There were no opening inventories of finished goods.
Required
Determine the variance for the following:
i) Direct material price
ii) Direct material usage
iii) Direct labour rate
iv) Direct labour efficiency
v) Variable overhead expenditure
4
vi) Variable overhead efficiency
vii) Fixed overhead expenditure
viii) Sales volume (in terms of profit)
ix) The aim behind a balanced scorecard is to provide a comprehensive framework for translating a company’s strategic objectives into a coherent set of performance measures. It allows managers to look at the business from four (4) different perspectives.
Required
State and briefly explain the four different perspectives of the balance score card.
by Bartleby ExpertThe aim behind a balanced scorecard is to provide a comprehensive framework for translating a
company’s strategic objectives into a coherent set of performance measures. It allows managers to
look at the business from four (4) different perspectives.
Required
State and briefly explain the four different perspectives of the balance score card
by Bartleby Expert
