Qu.

1, 2 & 3
A B C D

Material 15 5 10 5
Labour 30 5 15 10
Variable Overheads 15 7.5 5 7.5
Actual Variable Cost 60 17.5 30 22.5

Fixed Overhead per unit 10 10 12.5 12.5 45

Units 10000 10000 12500 12500 45000

1000 1000 1000 1000

Labour Hours 6 1 3 2 12000

Variable Overheads 35000

Fixed Overheads 45000
Total 80000

Allocation Rate Per Hour 6.67

Variable Overhead Rate 2.92
Fixed Overhead Rate 3.75

Reported Costs

Material 15 5 10 5 35000
Labour 30 5 15 10 60000
Variable Allocated 17.5 2.92 8.75 5.83 35000
Fixed Allocated 22.5 3.75 11.25 7.50 45000
Full Cost 85 16.67 45.00 28.33 175000

CCI Sales Price at 40% mark on 119 23.33 63.00 39.67

Standard Sales price 98 38.50 59.50 49.00

Analysis
Appearent Mark on 15% 131% 32% 73%

What is Going on
Charged
Variable Overheads 15 7.5 5 7.5
Fixed Overhead per unit 10 10 12.5 12.5
Total overhead Cost 25 17.5 17.5 20
As per System
 Variable Overheads 17.5 2.92 8.75 5.83
Fixed Overhead per unit 22.5 3.75 11.25 7.50
Total 40 6.67 20.00 13.33

Difference -15 10.83 -2.50 6.67

Dropping I IV II III

Qu. 4
Scenario 1
Contribution = Sales - Variable Cost
Reported Contribution 35.5 25.58 25.75 28.17 115000

Less Fixed Cost 45000

Profit 70000

Reported Contribution 35.5 28.17 127333

Less Fixed Cost 45000

Profit 82333

Actual Contribution 38 26.50 129000

Less Fixed Cost 45000

Profit 84000

Scenario 2
Actual Contribution 38 21.00 29.50 26.50 115000

Less Fixed Cost 45000

Profit 70000

Actual Contribution 38 29.50 135000

Less Fixed Cost 45000

Profit 90000
 A B C D

Material 5 10 5
Labour 5 15 10
Variable Overheads 7.5 5 7.5
Actual Variable Cost 17.5 30 22.5

Fixed Overhead per unit 10 10 12.5 12.5

Units 10000 10000 12500 12500

2000 1000 1000

Labour Hours 1 3 2

Variable Overheads
Fixed Overheads
Total

Allocation Rate Per Hour

Variable Overhead Rate
Fixed Overhead Rate

Reported Costs

Material 5 10 5
Labour 5 15 10
Variable Allocated 3.93 11.79 7.86
Fixed Allocated 6.43 19.29 12.86
Full Cost 20.36 56.07 35.71

CCI Sales Price at 40% mark on 0 28.5 78.5 50

Standard Sales price 98 38.5 59.5 49

Analysis
Appearent Mark on 89% 6% 37%
Reported Contribution 24.571429 22.714286 26.142857
 Material
Labour
Variable Overheads
Actual Variable Cost

45 Fixed Overhead per unit

45000 Units

7000 =(1*2000)+(3*1000)+(2*1000) Labour Hours

27500 =(7.5*2000)+(5*1000)+(7.5*1000) Variable Overheads

45000 Fixed Overheads
72500 Total

10.36 Allocation Rate Per Hour

3.93 Variable Overhead Rate
6.43 Fixed Overhead Rate

Reported Costs

25000 Material
35000 Labour
27500 Variable Allocated
45000 Fixed Allocated
132500 Full Cost

CCI Sales Price at 40% mark on

Standard Sales price

Appearent Mark on
Reported Contribution
 A B C D

5 5
5 10
7.5 7.5
17.5 22.5

10 10 12.5 12.5 45
10000 10000 12500 12500 45000

2000 0 2000
1 0 2 6000

30000
45000
75000

12.5
5
7.5

Reported Costs

5 5 15000
5 10 20000
5 10 20000
7.5 15 30000
22.5 40 85000

0 31.5 0 56

98 38.5 59.5 49

Analysis
71% 23%
23.5 24
 A B C D

Material 5
Labour 5
Variable Overheads 7.5
Actual Variable Cost 17.5

Fixed Overhead per unit 10 10 12.5 12.5 45

Units 10000 10000 12500 12500 45000

2000 0
Labour Hours 1 0 2000

Variable Overheads 15000

Fixed Overheads 45000
Total 60000

Allocation Rate Per Hour 30

Variable Overhead Rate 7.5
Fixed Overhead Rate 22.5

Reported Costs

Material 5 10000
Labour 5 10000
Variable Allocated 7.5 15000
Fixed Allocated 22.5 45000
Full Cost 40 80000

CCI Sales Price at 40% mark on 0 56 0 0

Standard Sales price 98 38.5 59.5 49

Analysis
Appearent Mark on -4%
Reported Contribution 21
 A

Material
Labour
Variable Overheads
Actual Variable Cost

Fixed Overhead per unit 10

Units

Labour Hours

Variable Overheads
Fixed Overheads
Total

Allocation Rate Per Hour

Variable Overhead Rate
Fixed Overhead Rate

Reported Costs

Material
Labour
Variable Allocated
Fixed Allocated
Full Cost

CCI Sales Price at 40% mark on 0

Standard Sales price 98

Analysis
Appearent Mark on
Reported Contribution
 B C D

5
5
7.5
17.5

10 20
2000 0 2000 20000

2000 0
1 0 2000

15000
20000
35000

17.5
7.5
10

eported Costs

5 10000
5 10000
7.5 15000
10 20000
27.5 55000

38.5 0 0

38.5 59.5 49

40%
21
 5
A B C D
Fixed Overhead per unit 10 10 12.5 12.5 45
Units 1000 1000 1000 1000 45000

1000 1000 1000 1000

Labour Hours 6 1 3 2 12
12000
Fixed Cost Absorbtion Rate 3.75

Fixed Cost Overhead Abstorption rate 22.5 3.75 11.25 7.5

A B C D

Material 15 5 10 5
Labour 30 5 15 10
Variable Overheads 15 7.5 5 7.5
Actual Variable Cost 60 17.5 30 22.5

Plus Fixed Cost 22.5 3.75 11.25 7.5

Total Reported Cost 82.5 21.25 41.25 30

Selling Price 98 38.5 59.5 49

Markon 19% 81% 44% 63%

Sce 1 85 17 45 28
Sce 2 82.5 21.25 41.25 30
Sce 3 81 16 48 30
Sce 4 77 20 45 32.5
 6

Fixed Overhead per unit

Units
Variable Overhead Per unit
Units
Total

=45000/12000
Labour Hours

Overhead Absorbtion Rate

Variable Ohd Abs. Rate
Fixed Rate

Fixed Cost Overhead Abstorption

Material
Labour
Variable Overheads
Actual Variable Cost

Fixed Cost

Total Reported Cost

Selling Price

Markon
 A B C D
10 10 20 12.5 12.5 25
1000 1000 20000 1000 1000 25000
15 7.5 22.5 5 7.5 12.5
1000 1000 22500 1000 1000 12500
42500 37500

1000 1000 1000 1000

6 1 7 3 2 5
7000 5000
6.07 7.50
2.86 5.00
3.21 2.50

22.5 3.75 11.25 7.5

A B C D

15 5 10 5
30 5 15 10
17.14 2.86 15 10
62.14 12.86 40 25

19.29 3.21 7.5 5

81.43 16.07 47.5 30

98 38.5 59.5 49

20% 140% 25% 63%

Fixed Overhead per unit
Units
Variable Overhead Per unit
Units
Total

Labour Hours

Fixed Overhead Cost

Fixed Overhead Absorption rate

Material
Labour
Variable Overheads
Actual Variable Cost

Fixed Cost

Total Reported Cost

Selling Price

Markon
 A B Total C D Total
10 10 20 12.5 12.5 25
1000 1000 20000 1000 1000 25000
15 7.5 22.5 5 7.5 12.5
1000 1000 22500 1000 1000 12500
42500 37500
A B Total C D Total
1000 1000 1000 1000
6 1 7 3 2 5
6000 1000 7000 5000

10000 10000 20000.00 12500 12500 25000.00

sorption rate 2.86 5.00

A B C D

15 5 10 5
30 5 15 10
15.00 7.50 5.00 7.50
60.00 17.50 30 22.5

17.14 2.86 15 10

77.14 20.36 45 32.5

98 38.5 59.5 49

27% 89% 32% 51%

No. of labour hours 6 1 3 2
1000 1000 1000 1000
A B C D

Material 15 5 10 5
Labour 30 5 15 10
Variable Overheads 15 7.5 5 7.5
Actual Variable Cost 60 17.5 30 22.5

Fixed Overhead Cost 10000 10000 12500 12500 45000

Variable Overhead Cost 15000 7500 5000 7500 35000
Total Overheads 80000

Labour Hours 6000 1000 3000 2000 12000

Overhead Allocation Rate/ Burdon

Rate per labour hour 6.67
Variable Overhead Rate 2.92
Fixed overhead Rate 3.75

Units 1000 1000 1000 1000

No. of labour hours 6 1 3 2
Reported Cost
A B C D

Material 15 5 10 5
Labour 30 5 15 10
Variable Overheads 17.5 2.92 8.75 5.83
Actual Variable Cost 62.5 12.92 33.75 20.83

Fixed Overheads 22.5 3.75 11.25 7.5

Total Cost 85 16.67 45.00 28.33

Mark up of 40% on cost 34 6.67 18.00 11.33

Reported / Expected Selling Price 119 23.33 63.00 39.67

Standard Sales price 98 38.50 59.50 49.00

Mark up % 15% 131% 32% 73%

1 Appearent Mark on 15% 131% 32% 73%
19% 81% 44% 63%
20% 140% 25% 63%
27% 89% 32% 51%
=Total Overheads/ Total Labour Hours
=Variable Overheads* Overhead Rate/ Total Overheads =35000*6.67/80000
=Fixed Overheads* Overhead Rate/ Total Overheads =45000*6.67/80000