CAF – 03 [Test – 8]

Standard costing

Question 1
A company manufactures a single product Y. During May 2021, it processed 3,648 kgs of the
product as follows:
Actual materials used:
Materials Kg Price per kg Rupees
(Rs.)
P 1,680 42.50 71,400
Q 1,650 28.00 46,200
R 870 64.00 55,680
4,200 173,280
Loss 552
Output 3,648

Standard costs/yield per batch:

Materials Kg Price per kg Rupees
(Rs.)
P 15 40 600
Q 12 30 360
R 8 60 480
35 1,440
Less: Normal loss 3
Standard output 32
Required:
Calculate the following material variances:
(i) price (ii) usage
(iii) mix (iv) yield (07)

Question 2
Extract from the records of AMAX Limited are as under:
Budget Actual
---------- Rupees ----------
Sales 27,000,000 27,295,000
Variable costs:
Raw Material (7,500,000) (8,461,450)
Labor (9,375,000) (9,463,125)
Variable overheads (3,000,000) (2,974,125)
Contribution 7,125,000 6,396,300
An analysis of the above figures has revealed the following:
• Actual units sold were 3% (1,500 units) more than the budgeted sales quantity and actual
sale price was lower by Rs. 10/- per unit.
• One unit of finished product requires 3 kgs of raw material and actual raw material price
was 6% higher than the budgeted price.
• Budgeted labor cost per hour was equivalent to 150% of budgeted raw material cost per
kg.
• Production department records show that labor utilization per unit of finished product
was 0.125 hour more than the budget.
• Variable overheads varied in line with labor hours.
Required:
Compute eight relevant variances and prepare a statement reconciling budgeted contribution
with the actual contribution. (18)

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