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  • 1 Original Budget Actual Flexible Budget: Labour Price

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    Prakash S
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    1. The company produced 12,000 units compared to the budgeted 10,000 units. Actual materials and labor costs were lower than budgeted, but variable overhead was higher than budgeted. Fixed overhead was equal to the budgeted amount. 2. Variance analysis can be used to analyze differences between actual and standard costs for materials, labor, and overhead. Favorable variances occur when actual costs are lower than standard costs. Material efficiency and labor efficiency variances look at differences in quantities used versus standards. Rate variances examine differences in actual versus standard prices paid. 3. Standard costs provide a benchmark for evaluating performance by comparing actual results to the standards. Variances identify where costs differed from expectations

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    The Flexible Budget

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    1. The company produced 12,000 units compared to the budgeted 10,000 units. Actual materials and labor costs were lower than budgeted, but variable overhead was higher than budgeted. Fixed overhead was equal to the budgeted amount. 2. Variance analysis can be used to analyze differences between actual and standard costs for materials, labor, and overhead. Favorable variances occur when actual costs are lower than standard costs. Material efficiency and labor efficiency variances look at differences in quantities used versus standards. Rate variances examine differences in actual versus standard prices paid. 3. Standard costs provide a benchmark for evaluating performance by comparing actual results to the standards. Variances identify where costs differed from expectations

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    © All Rights Reserved
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    3 views3 pages

    1 Original Budget Actual Flexible Budget: Labour Price

    Uploaded by

    Prakash S
    1. The company produced 12,000 units compared to the budgeted 10,000 units. Actual materials and labor costs were lower than budgeted, but variable overhead was higher than budgeted. Fixed overhead was equal to the budgeted amount. 2. Variance analysis can be used to analyze differences between actual and standard costs for materials, labor, and overhead. Favorable variances occur when actual costs are lower than standard costs. Material efficiency and labor efficiency variances look at differences in quantities used versus standards. Rate variances examine differences in actual versus standard prices paid. 3. Standard costs provide a benchmark for evaluating performance by comparing actual results to the standards. Variances identify where costs differed from expectations

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 3

    1

    Original Budget Actual Flexible Budget


    Units Produced (in units) 10000 12000 12000
    Materials used (kg) 400 700
    Materials cost ($) 8000 5000
    Direct Labour (hours) 35000 46102
    Direct Labour ($) 385000 507080
    Variable Overhead($) 350000 419161
    Fixed Overhead($) 160000 161000

    A) Material Rate

    (Actual unit cost - Standard unit cost) * Actual Quantity Purchased


    (5000-8000)*0.04= 120 A

    B) Material Efficiency

    (Standard Quantity-Actual Quantity)* Standard Cost


    (800-700)*0.8= 80F

    C) Labour Price

    (AR-SR)*AH
    (507080-385000)*3.5 427280

    D) Labour Efficiency
    (AH-SH)*SR
    (46102-35000)*38.5= 427427

    E) Variable Overhaed Rate

    Variable OH Expendure (AR-SR)*AH


    (350000-419161)*3.5= 242063.5

    Variable OH Efficency (AH-SH)*AR


    (46102-35000)*35= 388570

    F) Fixed Overhead Rate

    Fixed production expenture (AE-BE)


    (161000-160000)= 1000

    Fixed OH efficency (AH-SH)*OAR/hr


    Fixed OH capacity (AH-BH)*OAR/hr

    G) Standard costs provide information that is useful in performance evaluation. Standard costs ar
    deviations between the two are termed variances. Favorable variances result when actual costs
    The following illustration is intended to demonstrate the very basic relationship between actua
    “actual quantity” of input used to produce the output. AP means the “actual price” of the inpu
    to the “standard” quantity and price that was anticipated. Variance analysis can be conducted
    uation. Standard costs are compared to actual costs, and mathematical
    result when actual costs are less than standard costs, and vice versa.
    lationship between actual cost and standard cost. AQ means the
    actual price” of the input used to produce the output. SQ and SP refer
    alysis can be conducted for material, labor, and overhead.

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