A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 20,000 units were started into production in January; and there were 5,000 units that were 40% complete in the ending work in process inventory at the end of January.

What were the equivalent units of production for materials for the month of January?

It is necessary to calculate equivalent units of production in a department because

Hung-2 Ltd. produces vegan source, Product V, by mixing and heating three ingredients: A, B and C. The company uses a standard costing system to monitor its costs. The standard material cost for 100 Kg of Product V is as follows:

In October, 4,600 Kg of Product V was produced using the following material inputs:

Required:

Calculate the Material Usage, Mix and Yield Variances and interpret the results and suggest the possible causes.

Hung-1 Bhd. manufactures a chemical product, Product X, using two mixtures: Material A and Material B. The standard materials usage and cost are as follows:

In October, 80 units of Product X were produced. The material usage recorded as follows:

·       600Kg for Material A

·       750Kg for Material B

Required:

Calculate the following variances, interpret the results and suggest the possible causes:

(a) Calculate the Material Usage Variance

(b) Calculate the Mix and Yield Variance

A company produces hose for specialised industrial uses. The company has budgeted an output level of 14,000 units of Model LE-E1 hoses for January 202X. Budgeted overheads amount to £588,000 for fixed manufacturing overhead.

The company’s policy is to allocate overheads based on direct labour hour basis. The standard specification of the product shows that each unit would require 60 labour hours at fixed overhead cost of £0.70 per hour. 

At the end of January, the actual output was recorded at 15,000 units. Actual labour hours worked totalled 880,000. The costing system shows that fixed manufacturing overheads incurred were £608,000.

Required:

Analyse the following variance:

(a) Fixed overhead volume variance

(b) Fixed overhead volume efficiency variance

(c) Fixed overhead volume capacity variance

A company produces hose for specialised industrial uses. The company has budgeted an output level of 14,000 units of Model LE-E1 hoses for January 202X. Budgeted overheads amount to £588,000 for fixed manufacturing overhead. 

The company’s policy is to allocate overheads based on direct labour hour basis. The standard specification of the product shows that each unit would require 60 labour hours at fixed overhead cost of £0.70 per hour. 

At the end of January, the actual output was recorded at 15,000 units. Actual labour hours worked totalled 880,000. The costing system shows that fixed manufacturing overheads incurred were £608,000.

Required:

Analyse the fixed overhead expenditure variance

Le Energy Enterprise produces hose for specialised industrial uses. The company has budgeted an output level of 14,000 units of Model LE-E1 hoses for January 202X. Budgeted overheads amount to £420,000 for variable manufacturing overhead.

The company’s policy is to allocate overheads based on direct labour hour basis. The standard specification of the product shows that each unit would require 60 labour hours at variable overhead cost of £0.50 per hour. 

At the end of January, the actual output was recorded at 15,000 units. Actual labour hours worked totalled 880,000. The costing system shows that variable manufacturing overheads incurred were £460,000.

Required:

Analyse the detailed overhead cost variances in so far as the information permits.

(a) Variable overhead expenditure variance

(b) Variable overhead efficiency variance

If the labour efficiency variance is unfavourable and the cause is inefficient use of direct labour, the responsibility rests primarily with the

The per-unit standard for direct labour is 4 direct labour hours at $12 per hour. In producing 1,200 units last year, the actual direct labour cost was $51,200 for 4,000 direct labour hours worked, the direct labour efficiency variance is therefore

The per-unit standard for direct labour is 4 direct labour hours at $12 per hour. In producing 1,200 units last year, the actual direct labour cost was $51,200 for 4,000 direct labour hours worked, the direct labour rate variance is therefore