The following information has been collected from the cost records of P&L company for the year ended 31st October, 2021: Direct Materials 500,000 Direct Labour 400,000 Direct Expenses 40,000 Works Overheads 320,000 Office Expenses 189,000 The total number of direct labour hours were 200,000 involving 80,000 machine hours. I. Calculate the percentage on direct wages II. Calculate the productive labour hours rate III. Calculate the machine hour 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.
The following information has been collected from the cost records of P&L company for the
year ended 31st October, 2021:
Direct Materials 500,000
Direct Labour 400,000
Direct Expenses 40,000
Works
Office Expenses 189,000
The total number of direct labour hours were 200,000 involving 80,000 machine hours.
I. Calculate the percentage on direct wages
II. Calculate the productive labour hours rate
III. Calculate the machine hour rate
The traditional method of overhead allocation is based on a predetermined overhead rate. The predetermined overhead rate can be calculated by dividing total overhead by total direct labor hours, machine hours, direct wages etc.
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