The Professionals’ Academy Of Commerce

Certificate in Accounting and Finance Stage Examinations

Chapter-Standard Costing and Variance Analysis (Test 10) August 9, 2023
SOL (Sir Sajid) 26 marks- 50 Mins

CMAC
Question 1
Extract from the records of Delta Limited for the year 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% more than the budgeted sales quantity. This difference in units was 1,500 units.
Actual sale price was lower by Rs. 10/- per unit than standard.
 One unit of finished product requires 3 kgs of raw material and actual raw material price was 6% higher than
the standard price.
 Standard labor cost per hour was equivalent to 150% of standard raw material cost per kg.
 Production department records show that actual labor usage per unit of finished product was 0.125 hour more
than the budget.
 Variable overheads varied in line with labor hours.
Required:
Compute relevant variances and prepare a statement reconciling budgeted contribution with the actual contribution. (20)

Question 2
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 for one 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 (06)