STANDARD COSTING AND

VARIANCE ANALYSIS
SESSION 2

SLIDES PREPARED AND PRESENTED BY

NELSON PANDE
Kitana manufactures a single product. The standard cost card for one unit of the product is given:
$
Direct material: 10 kg × $7 per kg 70
Direct labour: 40 hours × $10 per hour 400
Variable overhead: 40 hours × $3 per hour 120
590
Standard selling price per unit. 650
Actual sales revenue was $1,350,000

For January, the company had budgeted to produce and sell 2,000 units, but 2,100 units were
actually produced and sold and the actual costs incurred were as follows:
Direct material: 22,500 kg purchased and used at a cost of $146,250
Direct labour: 83,000 hours worked at a cost of $845,000
Variable overhead: $248,200

Prepare an operating statement reconciling Budgeted contribution to Actual contribution

Sub-zero manufactures a single product. The standard cost card for one unit of the product is
given:

$
Direct material: 7 kg × $10 per kg 70
Direct labour: 50 hours × $8 per hour 400
Variable overhead: 50 hours × $2.4 per hour 120
590
Standard selling price per unit. 700

Actual sales revenue was $1,200,000

For November, the company had budgeted to produce and sell 1,000 units, but 1,500 units were
actually produced and sold and the actual costs incurred were as follows:
Direct material: 15,500 kg purchased and used at a cost of $186,000
Direct labour: 80,000 hours worked at a cost of $800,000
Variable overhead: $198,000

Prepare an operating statement reconciling Budgeted contribution to Actual contribution