Target costing – This is a costing technique which involves setting the target cost by
subtracting a desired profit margin from a competitive market price.
marto answered the question on February 26, 2019 at 08:29
- BS Limited manufactures a single standard product and operates a system of standard costing using a
fixed budget. As the company's assistant cost accountant, you are...(Solved)
BS Limited manufactures a single standard product and operates a system of standard costing using a
fixed budget. As the company's assistant cost accountant, you are responsible for preparing the
monthly operating statements. Details from the budget, the standard product costs and actual results
for the month ended 31 May 2003 are given below:
Required:
The operating statement for the month of May, 2004 showing:
(a) The budgeted profit.
(b) Variances for direct materials, direct wages, overheads and sales.
(c) The actual profit.
Date posted: February 26, 2019. Answers (1)
- Ujuzi Company Limited manufactures and sells one type of product Alpha . The standard
production costs of this item are as follows:(Solved)
Ujuzi Company Limited manufactures and sells one type of product Alpha . The standard
production costs of this item are as follows:
The fixed overheads are allocated on the basis of a budgeted production volume of 3.500 units per
year.During the financial year ended 31 October 2004, 4,000 units of output were produced. The
actual production costs incurred during the year are given below.
Required:
a) Material price and usage variances.
b) Labour rate and efficiency variances
c) Total variable overheads variances
d) Fixed overheads volume variances
e) Identify two possible causes of;-
i) Material usage variance
ii) Labour efficiency variance
Date posted: February 26, 2019. Answers (1)
- Ufundi Furniture Ltd. Manufactures a wide range of home furniture. Recently the company added
to its range a side board. The standard cost specification for each...(Solved)
Ufundi Furniture Ltd. Manufactures a wide range of home furniture. Recently the company added
to its range a side board. The standard cost specification for each side board is given below:
The abnormal idle hours were 400 and the hours worked were recorded as 4,800 hours.
Required:
i) Material price variances (for both materials).
ii) Material usage variance (for both materials)
iii) Labour rate of pay variance.
iv) Labour efficiency variance.
v) Idle time variance.
(c) Suggest possible causes of the material variances.
Date posted: February 26, 2019. Answers (1)
- State the advantages of using standard costs in the manufacturing industry.(Solved)
State the advantages of using standard costs in the manufacturing industry.
Date posted: February 26, 2019. Answers (1)
- BCH Ltd produces a type of liquid fertilizer. The production of this liquid fertilizer requires three
different types of chemicals namely Exe, Wye and Zed. The...(Solved)
BCH Ltd produces a type of liquid fertilizer. The production of this liquid fertilizer requires three
different types of chemicals namely Exe, Wye and Zed. The chemicals are mixed in the
proportion of 0.4, 0.3 and 0.3 respectively and their standard costs are Sh.12 Sh.7 and Sh.5 per
litre respectively.
Additional information:
1. In the recent past, the standard yield has been at 80% on 100 litres of the chemicals mix.
2. The company maintains a policy of not carrying any raw materials, as storage space is
limited.
3. Annual production of the liquid fertilizer has been set at 8,320,000 litres.
4. In the month of April 2006, the company produced 150,000 litres of the fertilizer at a total
chemicals cost of Sh.1798, 000. Actual numbers of litres used and cost per litre for the three
chemicals were as follows:
Date posted: February 26, 2019. Answers (1)
- The standard mix of a product branded Max is as follows:(Solved)
The standard mix of a product branded Max is as follows:
Required:
i) Material price variance.
ii) Material mix variance.
iii) Material yield variance.
Date posted: February 26, 2019. Answers (1)
- Excel limited manufacturers a product branded Regular that uses three different ingredients
namely X, Y, and Z. The standard mix of product Regular is provided below;-(Solved)
Excel limited manufacturers a product branded Regular that uses three different ingredients
namely X, Y, and Z. The standard mix of product Regular is provided below;-
Required:
i. Material price variance
ii. Material mix variance
iii. Material yield variance
iv. Material usage variance
v. Material cost variance
Date posted: February 26, 2019. Answers (1)
- Hygiene products limited manufacturers a single product, a melamine kitchen sink with a standard
cost of sh. 8000 made up as follows:-(Solved)
Hygiene products limited manufacturers a single product, a melamine kitchen sink with a standard
cost of sh. 8000 made up as follows:-
Required:
a) In columnar form prepare
i. Actual income statement
ii. Flexible income statement
iii. A reconciliation statement using the reported variances
b) Computer the following variances
i. Material price variance
ii. Material usage variance
iii. Labour rate variance
iv. Labour efficiency variance
v. Material cost variance
Date posted: February 26, 2019. Answers (1)
- Highlight four disadvantages of standards costing.(Solved)
Highlight four disadvantages of standards costing.
Date posted: February 26, 2019. Answers (1)
- Viwandani company limited manufactures a single product branded Exe
The following data relate to actual output costs and variances for the month of March 2010.(Solved)
Viwandani company limited manufactures a single product branded Exe
The following data relate to actual output costs and variances for the month of March 2010.
Date posted: February 26, 2019. Answers (1)
- Briefly explain four applications of standard costing.(Solved)
Briefly explain four applications of standard costing.
Date posted: February 26, 2019. Answers (1)
- Explain four factors to consider in deciding whether to investigate variances revealed by a standard
costing system.(Solved)
Explain four factors to consider in deciding whether to investigate variances revealed by a standard
costing system.
Date posted: February 26, 2019. Answers (1)
- XYZ Ltd. produces a product branded Zec, The company operates a standard costing system.
The budgeted product information for the month of October 2011 was as...(Solved)
XYZ Ltd. produces a product branded Zec, The company operates a standard costing system.
The budgeted product information for the month of October 2011 was as follows:
Required:
Prepare an operating statement which reconciles budgeted and actual profits using variances
approach.
Date posted: February 26, 2019. Answers (1)
- Benefits that would accrue to an organisation that operates a standard costing system.
(Solved)
Benefits that would accrue to an organisation that operates a standard costing system.
Date posted: February 26, 2019. Answers (1)
- ABC Ltd produces a single product branded Zed. The standard cost per unit for the month of
April 2012 was as follows:(Solved)
ABC Ltd produces a single product branded Zed. The standard cost per unit for the month of
April 2012 was as follows
Budgeted production was 2,000 units while the actual production was 1,800 units.
Required
i) Material price variance and material usage variance.
ii) Labour rate variance and efficiency variance.
iii) Fixed overhead volume variance and capacity variance.
iv) Variable overhead expenditure variance and efficiency variance.
Date posted: February 26, 2019. Answers (1)
- Explain why investigations of variances are important in a standard costing system.(Solved)
Explain why investigations of variances are important in a standard costing system.
Date posted: February 26, 2019. Answers (1)
- Describe the following types of standards in the context of standard costing.
i) Ideal standards
ii) Attainable standards.(Solved)
Describe the following types of standards in the context of standard costing.
i) Ideal standards
ii) Attainable standards.
Date posted: February 26, 2019. Answers (1)
- Eval Ltd. manufactures a product branded SCQ that uses three different ingredients namely;
Exe, Wye. and Zed. The standard prime cost is as follows:(Solved)
Eval Ltd. manufactures a product branded SCQ that uses three different ingredients namely;
Exe, Wye. and Zed. The standard prime cost is as follows:
Additional information:
1. During the month of September 2013, Eval Ltd. manufactured and sold 6,000 units.
2. The actual material costs were as follows:
3. During the month of September 2013, the company worked for 17,500 direct labour hours of
which 2,500 hours were paid at the rate of Sh.12 per hour. The rest were paid at a standard rate.
Required:
i) Materials price variance.
ii) Materials usage variance.
iii) Labour rate variance.
iv) Labour efficiency variance.
Date posted: February 26, 2019. Answers (1)
- Varb Ltd. manufactures a product branded QM
The standard cost per unit of QM is given below:(Solved)
Varb Ltd. manufactures a product branded QM
The standard cost per unit of QM is given below:
Additional information:
1. For the month of April 2014, the budgeted production of product QM was 24,000 units.
2. Fixed overheads are absorbed on a labour hour basis.
3. The actual results for the month of April 2014 were as follows:
Required:
i) Materials price variance.
ii) Materials usage variance.
iii) Labour rate variance.
iv) Labour efficiency variance.
v) Fixed overheads expenditure variance.
vi) Fixed overheads volume variance.
Date posted: February 26, 2019. Answers (1)
- Explain three differences between standard costs and estimated costs.(Solved)
Explain three differences between standard costs and estimated costs.
Date posted: February 26, 2019. Answers (1)