The following is information related to X Company, a company that uses a standard cost system:
Standard cost card for 1 unit of Product A:
Direct materials – Raw Material A (1 kilogram @ $ 20/kg.) $ 20
Direct materials – Raw Material B (1 kilogram @$ 10/kg.) $ 10
Direct labour (1 hour @ $15/hr.) $ 15 V
ariable overhead (1 hour @ $ 5/hr.) $ 5
Fixed overhead (1 hour @ $ 10/hr.) $ 10 Total budgeted fixed overhead: $ 1,000
Budget total units of production: 100 units
Actual units produced 88 units
Actual costs incurred:
Direct materials – Raw Material A (130 kilograms $ 2,860
Direct materials – Raw Material B ( 60 kilograms) $ 660
Direct labour (100 hours) $ 1,600
Variable overhead (100 hours) $ 480
Fixed overhead $ 1,120
Required: 1) Prepare a 5-column analysis, with the columns as follows: Actual, Cost Variances, Flexible Budget, Volume Variance, Master Budget
Solution:
Particulars | Actual results | Cost Variances | Flexible Budget | Volume Variance | Master Budget | ||
Unit Produced | 88 | 88 | 100 | ||||
Direct material - Raw material A | $2,860.00 | $1,100.00 | U | $1,760.00 | $240.00 | F | $2,000.00 |
Direct material - Raw material B | $660.00 | $220.00 | F | $880.00 | $120.00 | F | $1,000.00 |
Direct labor | $1,600.00 | $280.00 | U | $1,320.00 | $180.00 | F | $1,500.00 |
Variable overhead | $480.00 | $40.00 | U | $440.00 | $60.00 | F | $500.00 |
Fixed overhead | $1,120.00 | $120.00 | U | $1,000.00 | $0.00 | None | $1,000.00 |
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