Question

Assignment

This company is introducing a standard cost calculation system.

	Quantity standard	price standard	Standard cost
Direct material cost	3kg	300￥	900￥
Direct labor cost	6hours	200￥	1200￥
Variable manufacturing overhead	6hours	50￥	300￥
Fixed Manufacturing Indirect Cost	6hours	30￥	180￥
			2580￥

⓵Standard cost per unit of product set by the company

⓶ The fixed manufacturing overhead budget is 225,000￥, The standard operation is also 7,500 hours

⓷ Direct Material Related Data.

● purchase volume(credit) : 4000kg ● unit price of purchase price : 310￥/kg

● amount used : 3500kg

⓸ Actual amount of direct labor cost : ● Actual operation time 7400hours

● actual rate of wage 210￥

⓹ Actual amount of variable manufacturing overhead costs : 340000￥

Actual amount of fixed manufacturing overhead costs : 230000￥

⓺ 1200 units of finished product, There is no work in hand.

⓻ 1,100 units were sold on credit. selling price 3500￥/unit

Question

1. Analyze the differences for each of the following cost elements

3)Difference in consumption and efficiency of variable manufacturing overhead

Answer 1

All amounts are in ¥

Budgeted units = 7,500 hours /6 = 1,250 units

Actual units = 1,200 units

1) Direct material Variance :

Standard Price SP = 300

Actual Price AP = 310

Standard quantity SQ = 3 x 1,200 = 3,600

Actual quantity AQ = 3,500

Direct material price variance = AQ (SP - AP) = 3,500 x (300 - 310) = 35,000 adverse

Direct material usage/ quantity variance = SP (SQ - AQ) = 300 x (3,600 - 3,500) = 30,000 favourable

Total direct labour Variance = 5,000 adverse (30,000 - 35,000)

Direct labour Variance :

Actual Rate AR = 210

Standard Rate SR = 200

Actual hours AH = 7,400 hours

Standard Hours SH = 6 x 1,200 = 7,200 hours

Direct labour rate variance = AH x (SR - AR) = 7,400 x (200 - 210) = 74,000 adverse

Direct labour usage/ quantity Variance = SR x (SH - AH) = 200 x (7,200 - 7,400) = 40,000 adverse

Total direct labour variance = 114,000 adverse

2)

Variable Overhead Variance :

AR = 340,000/7,400 = 45.9459

SR = 50

AH = 7,400 hours (same as direct labour)

SH = 7,200 hours (same as direct labour)

Variable Overhead expenditure/rate variance = AH (SR - AR) = 7,400 (50 - 45.9459) = 30,000 favourable

Variable overhead efficiency Variance = SR (SH - AH) = 50 (7,200 - 7,400) = 10,000 adverse

Total Variable overhead variance = 20,000 favourable (30,000 - 10,000)

Fixed Manufacturing Overhead :

SR = 30

SH = 6 x 1,200 = 7,200 hours

AH = 7,400 hours

AR = 230,000/7,400 = 31.0811

Fixed overhead rate variance = Absorbed fixed Overhead - Actual fixed overhead

= (AH x SR) - 230,000

= (7,400 x 30) - 230,000

= 8,000 adverse

Fixed overhead capacity variance = Budgeted fixed overhead - Absorbed fixed overhead

= 225,000 - AH x SR

= 225,000 - 7,400 x 30

= 3000 favorable

Total fixed overhead variance = 5,000 adverse (3,000 - 8,000)