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Standard cost card
$ per unit
Selling price 150
Direct materials 2 kg @ $25/kg 50
Direct labour 3 hours @ $10 per hour 30
Fixed overhead 2 hours at $10 per hour 20
Profit 50Standard cost operating statement
$ $
Budgeted profit 600,000
Sales volume variance 60,000 adv
Standard profit on actual sales 540,000
Sales price variance 20,000 fav
560,000Production cost variances
Adverse Favourable
$ $
Material price 7,500
Material usage 8,000
Labour rate 2,000
Labour efficiency 500
Fixed overhead expenditure 7,000
Fixed overhead volume 2,000
19,000 8,000 11,000 adv
Actual profit 549,000Select the appropriate words, phrases or numbers to correctly complete the commentary on the last month’s results.
Actual units sold were_____________ budgeted and actual sales revenue was $________________
Production was____________than budgeted.
There is no point at all in setting me a test question and expecting me to answer it.
You must have an answer in the same book in which you found the question, and so you should ask about whatever it is in the answer that you are not clear about. Then I will explain.
I do obviously assume that you have watched my free lectures on variances. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
Sir there is answer but i want explanation there is only figures .
actual units sold were _________ answer 1200 less than budgeted
60000/50= 1200 ?actual sales revenue was $________________ answer $1640,000
Production was____________than budgeted ( ans 100 less )
kindly explain. why actual sales revenue was 1640,000 and production was 100 less than budgeted
The budgeted sales were 600,000/50 = 12,000 units
The actual sales were 540,000/50 = 10,800 units, which is 1,200 less than budgeted.The actual sales should have got revenue of 10,800 x $150 = $1,620,000.
There is a sales price variance of 20,000 favourable, therefore the actual revenue was 1,620,000 + 20,000 = $1,640,000The fixed overhead volume variance is $2,000 adverse. The standard fixed overheads are $20 per unit. Therefore production is 2,000/20 = 100 units less than budgeted.
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