70.2K

Verified Solution

Link Copied!

QUESTION 3 [15 MARKS] Wise Fool Ltd has prepared the following standard cost information for one unit of product X: Direct materials 2 kg @N$13/kg N$26.00 Direct labour 3.3 hours @N$12/hour N$39.60 Variable overheads 3.3 hours @N$2.50 N$8.25 Actual results for the period were recorded as follows: Production Materials - 26,400 kg Labour-40,200 hours Variable overheads 12,000 units N$336,600 N$506,520 N$107,250 All of the materials were purchased and used during the period. Required: a. Calculate the material price variance. b. Calculate the material usage variance. C. Calculate the labour rate variance. d. Calculate the labour efficiency variance. e. Calculate the variable overhead efficiency variance. (3) (3) (3) (3) (3) QUESTION 1 [14 MARKS] Chama Cha Mapinduzi Ltd is preparing budget for the last four (4) months of the year 2020. The company manufactures and sells one product. The selling price is N$150 per unit but this will increase to N$160 as from 1 November 2020. The budgeted sales volumes are: Units September 40,000 October November December 50,000 30,000 45,000 Sales for January 2021 are expected to be 40,000 units Each unit of products uses 3 units of Component A, 2 units of Component B and 1 unit of Component C, the current unit price of which are as follows: NS 9 Component A Component B Component 6 25 Component A and B are expected to increase in price by 10% from 1 October 2020. Component will rise by 5% from the same date. Labour costs for the product are N$30 per unit, this will increase by 5% from 1 December 2020 Variable production overhead will be N$10 per unit. Fixed production overhead is budgeted at N$264,000 for the year and incurred evenly over each period. Inventory of finished units is budgeted at 20% of the next month period's sales. No inventories of components are held Required: Prepare the following budgets for Chama Cha Mapinduzi Ltd: (a) Production budget (in units) for four months (September to December 2020). (b) Component usage budget (in units) for four (4) months (Sept to December 2020). (2) (6) 2 (c) Component cost budget (in N$) for four (4) months (Sept to December 2020). (6) QUESTION 2 [21 MARKS Botsotse Enterprise Lid has prepared its budgets for the coming financial year and for the tree production and two service departments they are PRODUCTION COST CENTRES Machining N$360 000 Assembly N$320 000 N5260 000 Finishing SERVICES COST CENTRES Stores N5220 000 Canteen N$202 000 Further assume that the service departments provide the following services to other departments: Machining Assembly Finishing Stores Canton Stores 20% 30% 10% 40% Canteen 30% 30% 204 Production hours are budgeted as folows: Machine hours Labour Hours Direct labour cost Machining 9 200 8300 N$49 300 Assembly 8 100 11 250 N$86 250 Finishing 6600 9000 N$49 500 Required: a Prepare a statement showing the overheads to be absorbed in each production department - after spreading service departments cost using the reciprocal method algebraic method) (151 Set predetermined absorption rates using machine hours in Fabrication Direct labour hours in assembly, a percentage on labour in Finishing (3) c. The following actual results are given and you are required to calculate under or over absorption in each department for the period. (3) Fabrication Assembly Finishing Overheads N$472 000 N$402000 N$304000 Machine hours 10 000 8 250 6 600 Direct labor hours 8 450 11 000 9 100 Direct labor cost N$51 100 N$57 200 N$51 000 QUESTION 3 [15 MARKS] Wise Fool Ltd has prepared the following standard cost information for one unit of product X: Direct materials 2 kg @N$13/kg N$26.00 Direct labour 3.3 hours @N$12/hour N$39.60 Variable overheads 3.3 hours @N$2.50 N$8.25 Actual results for the period were recorded as follows: Production Materials - 26,400 kg Labour-40,200 hours Variable overheads 12,000 units N$336,600 N$506,520 N$107,250 All of the materials were purchased and used during the period. Required: a. Calculate the material price variance. b. Calculate the material usage variance. C. Calculate the labour rate variance. d. Calculate the labour efficiency variance. e. Calculate the variable overhead efficiency variance. (3) (3) (3) (3) (3) QUESTION 1 [14 MARKS] Chama Cha Mapinduzi Ltd is preparing budget for the last four (4) months of the year 2020. The company manufactures and sells one product. The selling price is N$150 per unit but this will increase to N$160 as from 1 November 2020. The budgeted sales volumes are: Units September 40,000 October November December 50,000 30,000 45,000 Sales for January 2021 are expected to be 40,000 units Each unit of products uses 3 units of Component A, 2 units of Component B and 1 unit of Component C, the current unit price of which are as follows: NS 9 Component A Component B Component 6 25 Component A and B are expected to increase in price by 10% from 1 October 2020. Component will rise by 5% from the same date. Labour costs for the product are N$30 per unit, this will increase by 5% from 1 December 2020 Variable production overhead will be N$10 per unit. Fixed production overhead is budgeted at N$264,000 for the year and incurred evenly over each period. Inventory of finished units is budgeted at 20% of the next month period's sales. No inventories of components are held Required: Prepare the following budgets for Chama Cha Mapinduzi Ltd: (a) Production budget (in units) for four months (September to December 2020). (b) Component usage budget (in units) for four (4) months (Sept to December 2020). (2) (6) 2 (c) Component cost budget (in N$) for four (4) months (Sept to December 2020). (6) QUESTION 2 [21 MARKS Botsotse Enterprise Lid has prepared its budgets for the coming financial year and for the tree production and two service departments they are PRODUCTION COST CENTRES Machining N$360 000 Assembly N$320 000 N5260 000 Finishing SERVICES COST CENTRES Stores N5220 000 Canteen N$202 000 Further assume that the service departments provide the following services to other departments: Machining Assembly Finishing Stores Canton Stores 20% 30% 10% 40% Canteen 30% 30% 204 Production hours are budgeted as folows: Machine hours Labour Hours Direct labour cost Machining 9 200 8300 N$49 300 Assembly 8 100 11 250 N$86 250 Finishing 6600 9000 N$49 500 Required: a Prepare a statement showing the overheads to be absorbed in each production department - after spreading service departments cost using the reciprocal method algebraic method) (151 Set predetermined absorption rates using machine hours in Fabrication Direct labour hours in assembly, a percentage on labour in Finishing (3) c. The following actual results are given and you are required to calculate under or over absorption in each department for the period. (3) Fabrication Assembly Finishing Overheads N$472 000 N$402000 N$304000 Machine hours 10 000 8 250 6 600 Direct labor hours 8 450 11 000 9 100 Direct labor cost N$51 100 N$57 200 N$51 000

Answer & Explanation Solved by verified expert

See Answer