[nitishthapa]

Thank you so much John

[nitishthapa]

thanks John, thanks for your guidance

[nitishthapa]

Thanks John for making me clear on the ROI, the answer you have given me will be helpful for my entire career thanks again ….

[nitishthapa]

Yes John i got the answer, watched your both videos as well from pricing lecture and live revision kit for this question thanks so much….

[nitishthapa]

I think i found the solution for my question the reason they using 750 unites is as mention in NOTES: Riki Ltd does not hold any inventories – this shows that they sell all they produce which means 750 is budgeted sales.
If i am still wrong could you please tell me the reason ? Thanks

[nitishthapa]

I have one more question sir,

there is question in kaplan text book

Riki Ltd. produces and sells one product only. The standard cost price for one unit being as follows:

D Mat A- 10 kg at $12/kg – $120
D Mat B- 6 kg at $ 5 /kg – $30
D wages 5 hr at $ 8/hr – $ 40
Fixed prod. o/h – $60
Total standard cost – $250
Std. gross profit – $ 50

Std. selling price -$300

The fixes production overhead included in the standard cost is based on an expected monthly output of 750 units . Riki Ltd. use an absorption costing system.

Actual sales unit is 700 units.

Sales 700 @ $ 320 -$224000
Direct material :
A-7500 kg – $91500
B -7500kg – $ 20300

Direct wages 3400hrs – $ 27880
Fixed production o/h – $ 37000
Total – $ 176680

Gross profit – $47320

Notes: Riki Ltd does not hold any inventories

Required

You are required to reconcile budgeted profit with actual profit for the period., calculating the following variance

Selling price, sales volume, material price, material usage, labour rate, labour efficiency, fixed overhead expenditure and fixed over volume.

My Question- . They are using 750 units to calculate budgeted profit , but there is no mention 750 as budgeted sales, could you please tell why they using 750 as budgeted sales figure, there is not given any units figure except 750 and 700.

[nitishthapa]

Thanks sir, the reason i got confused is they have given this (Budgeted contribution =(budgeted production * budgeted contribution/unit), in the format but any way i am crystal clear for it.

[nitishthapa]

The operating statement i am asking is related to variance analysis

[nitishthapa]

@nitishthapa said:
As i looked at your video on operating statement under both costing method you used sales budget , but kaplan text book made me confused , under the marginal costing approach it says for
Budgeted contribution (budgeted production * budgeted contribution/unit),

could you please tell the reason why they using budgeted production instead of budgeted sales.

[Author]

Posts