Question

In: Accounting

TG manufactures Product Z. Its standard selling price is $55. The production and sales budget for...

TG manufactures Product Z. Its standard selling price is $55. The production and sales budget for the quarter ended 31 March 20X3 was 7,500 units. The standard specification per unit of Product Z comprises: Direct labour 4 standard hours at $6/hour Direct material 1.2 kg at $10/kg Standard variable overhead 4 standard hours at $1/hour Budgeted fixed overhead $75,000 At the end of the quarter the management accounts showed the following:

Production and sales of product Z in units: 7700

Actual sales revenue: $424270

Actual direct labour (31,750): $192577

Actual direct material (8855 kg) :    $89436

Actual fixed overhead: $72400

(a) Prepare a statement reconciling budgeted and actual profit in the quarter, using absorption costing.

(b) Prepare a statement reconciling budgeted and actual profit in the quarter, using marginal costing.

Solutions

Expert Solution

Below are the working for calculation of variances. Minus denote Adverse (A) and positive figure denote Favorable (F)

material st. price act. Price act. Qty std. qty
92400 89436 8855 9240
Variance 2964 F
Labour cost variance st. hours act. Hours actual standard
30800 31750 192577 184800
Variance -7777
Variable overhead variance
st. hours act. Hours actual standard
30800 31750
variance -950
Fixed overhead variance
Budeged (-) Actual
75000 72400
Variance 2600
Sale variance
Budeged (-) Actual
423500 424270
770
Statement under absorption costing
budgeted profit 32723
sales volume variance
sales price variance 770 f
----
cost variances $f $a
materials price 2964
material usage
labour rate 7777
labour idle
labour efficiency
variable overheads expenditure 950
variable overheads efficiency
fixed overheads expenditure 2600
fixed overheads efficiency
fixed overheads capacity
---- ----
5564 8727 33493 30330
Actul Profit 38107
Statement under Marginal costing
budgeted profit 32723
sales volume variance
sales price variance 770
----
cost variances $f $a
materials price 2964
material usage
labour rate 7777
labour idle
labour efficiency
variable overheads expenditure 950
variable overheads efficiency
2964 8727 33493 27730
Actul Profit 38107

ekkarill92 answered 5 months ago
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