question archive A company uses a standard cost card for which the information below has been provided: • Ploten and Plotex use the same direct material which is expected to cost $100 per kilogram
A company uses a standard cost card for which the information below has been provided: • Ploten and Plotex use the same direct material which is expected to cost $100 per kilogram
Subject:AccountingPrice: Bought3
A company uses a standard cost card for which the information below has been provided:
• Ploten and Plotex use the same direct material which is expected to cost $100 per kilogram. Plotex uses five (5) kilograms and Ploten uses four (4) kilograms.
• Direct labour is expected to cost $300 per hour. Plotex requires two (2) hours and Ploten requires three (3) hours.
• Fixed Production overheads are apportioned based on the Direct Labour Cost per unit for each product and then absorbed on a per unit basis.
iii. Stock, Output and Sales data for the month of July are as follows:
Details Plotex Ploten
Units Units
Sales 12,100 8,950
Production 12,000 9,000
Opening stock 150 100
$ $
Selling price per unit $2,000 $3,000
Note: The Company is expected to produce 10,000 units of each product for the month.
iv. Actual Results for Plotex for July are as follows:
• Direct raw materials purchased and used; 48,000 kgs at $105 per kg.
• Direct Labour for 36,000 hours at $290 per hour.
v. Actual Results for Ploten for July are as follows:
• Direct raw materials purchased and used; 45,000 kgs at $105 per kg.
• Direct Labour for 31,500 hours at $290 per hour.
3. Required is a standard cost card for both products showing the Marginal Cost per unit
and the Full Cost per unit. (6 marks)
4. Calculate the Closing stock for both products. (4 marks)
5. Required is a Marginal Costing Statement for the month. (12 marks)
6. Required is an Absorption Costing Statement for the month. (16.5 marks)
7. Reconcile the profit as per Absorption Costing Statement with the
profit as per Marginal Costing Statement. (4 marks)
8. For both products, calculate the following variances:
a. Direct Material Price Variance
b. Direct Material Usage Variance
c. Direct Labour Rate Variance
d. Direct Labour Efficiency Variance
(16 marks)
9. Suggest two (2) possible reasons for each of the variances you calculated. (4 marks)
10. Reconcile the Profit as per Marginal Costing Statement with the Actual
Profit (based on results calculated from part 5). (3 marks)
11. Reconcile the Profit as per Absorption Costing Statement with the Actual
Profit (based on results calculated from part 6) (4 marks)
12. Determine the break-even points and margin of safety in (units and sales revenue)
for both Plotex and Ploten. (4 marks)
13. Using the results calculated in activity 12 explain break-even point. (2 marks)
14. Define margin of safety and its impact on the amount of goods produced. (2marks)
