Question 3 Owen plc manufactures one product, and the entire product is sold as soon as it is produced. The company operates a standard costing system and analysis of variances is made every month. The standard cost card for a product is as follows. Materials (4 Kg at £4 per Kg) Labour (4 Hours at £5 per hr) Variable overheads (5 hrs at £2 per hr) Fixed overheads (6 hrs at £3 per hr) Budgeted selling price is £80 per unit Budgeted production Budgeted sales There is no opening inventory The actual results are as follows: Sales: 8,400 units for £613,200 Production: 9,900 units Actual costs: Materials (35,464 kg): £163,455 £ per Unit 16 20 10 18 £64 8.900 units 8,200 units

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 3
Owen plc manufactures one product, and the entire product is sold as soon as it is
produced. The company operates a standard costing system and analysis of
variances is made every month. The standard cost card for a product is as follows.
Materials (4 Kg at £4 per Kg)
Labour (4 Hours at £5 per hr)
Variable overheads (5 hrs at £2 per hr)
Fixed overheads (6 hrs at £3 per hr)
Budgeted selling price is £80 per unit
Budgeted production
Budgeted sales
There is no opening inventory
The actual results are as follows:
Sales: 8,400 units for £613,200
Production: 9,900 units
Actual costs:
Materials (35,464 kg): £163,455
Labour: £ 234,515
Variable overheads: £97,348
Fixed overheads: £ 144,074
£ per Unit
16
20
10
18
£64
8.900 units
8,200 units
Required:
a) Prepare a flexed budget and calculate the total variances
b) Using the data, analyse each of the cost variances: Materials; Labour;
Variable Overheads and; Fixed Overheads
c) Using data, calculate the Sales price variance and the Sales volume variance
Transcribed Image Text:Question 3 Owen plc manufactures one product, and the entire product is sold as soon as it is produced. The company operates a standard costing system and analysis of variances is made every month. The standard cost card for a product is as follows. Materials (4 Kg at £4 per Kg) Labour (4 Hours at £5 per hr) Variable overheads (5 hrs at £2 per hr) Fixed overheads (6 hrs at £3 per hr) Budgeted selling price is £80 per unit Budgeted production Budgeted sales There is no opening inventory The actual results are as follows: Sales: 8,400 units for £613,200 Production: 9,900 units Actual costs: Materials (35,464 kg): £163,455 Labour: £ 234,515 Variable overheads: £97,348 Fixed overheads: £ 144,074 £ per Unit 16 20 10 18 £64 8.900 units 8,200 units Required: a) Prepare a flexed budget and calculate the total variances b) Using the data, analyse each of the cost variances: Materials; Labour; Variable Overheads and; Fixed Overheads c) Using data, calculate the Sales price variance and the Sales volume variance
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