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- The differences between standard and actual figures are called variances. These variances may be favourable of unfavourable. These are recorded into cost accounts. For this purpose, the following procedure is adopted:-
a) Variances are calculated at the time of occurrence or when he respective element of cost is charged to production.
b) Variances accounts are maintained for each type of variance.
c) Transfers between the work in progress, finished goods and cost of sales are made at standard figures.
d) Stock of raw materials, work in progress and finished goods are valued at standard cost.
e) Unfavourable price or expenditure variances are credited to the respective control account and debited to the respective variances account. For example, adverse labour rate variance is debited to labour rate variance account and credited to wages control account. Similarly, adverse material price variance is debited to material price variance account and credited to stores control account. Favourable price or expenditure variances are debited to respective control account and credited to respective variance account.
f) Unfavourable usage or efficiency variances are debited to respective variance account and credited to work in progress account. For example, adverse material usage variance of adverse labour efficiency variance is debited to material usage variance account or labour efficiency account and credited to W.I.P account. If the usage or efficiency variances are favourable then debit W.I.P account and credit respective variance account.
g) At the end of the year, the balances in the variance accounts are transferred to the profit and loss account. It means adverse variances are debited to the profit and loss account and favourable variances are credited to the profit and loss account.
Wilfykil answered the question on August 7, 2019 at 06:14
- The budgeted and actual profit statements of ideal Manufacturers Ltd for the latest financial year are given below:-(Solved)
The budgeted and actual profit statements of ideal Manufacturers Ltd for the latest financial year are given below:-
Prepare a statement reconciling the budgeted profit of Shs 160,000 to the actual profit of Shs 132,000.
Date posted: August 7, 2019. Answers (1)
- Easy Wash Ltd. Produces powder sap for household use. The standard direct costs per carton containing 20 packets of one kilogrammes each are as follows:-(Solved)
Easy Wash Ltd. Produces powder sap for household use. The standard direct costs per carton containing 20 packets of one kilogrammes each are as follows:-
Raw Materials:
Required:
(a) Price and usage variances for each raw material
(b) Labour rate and efficiency variances
(c) Sales price and volume variances
(d) Overhead expenditure variances
Date posted: August 7, 2019. Answers (1)
- From the following information, calculate the sales variances.(Solved)
From the following information, calculate the sales variances.
Date posted: August 7, 2019. Answers (1)
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Calculate the fixed overhead variance from the information set out below:-
Date posted: August 7, 2019. Answers (1)
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Calculate the variable overhead variances from the information below:-
Date posted: August 7, 2019. Answers (1)
- Discuss the following:
1. Variable Overhead Variances
2. Fixed Overhead Variances
3. Sales Margin Variance
(Solved)
Discuss the following:
1. Variable Overhead Variances
2. Fixed Overhead Variances
3. Sales Margin Variance
Date posted: August 7, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
- Explain Material Cost Variance(Solved)
Explain Material Cost Variance
Date posted: August 6, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
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Which factors must be considered in standard costing?
Date posted: August 6, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
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Date posted: August 6, 2019. Answers (1)
- During a period 3000 units of a main product were produced at sh 60 per unit. (Solved)
During a period 3000 units of a main product were produced at sh 60 per unit. Total production were sh 125000. A by product was produced together with main product. This by-product was 100 units and it was sold for sh 55 per unit post separation cost of this by product were sh 500. Calculate the production cost and profit of the main product.
Date posted: August 6, 2019. Answers (1)
- The following data relates to three products XYZ(Solved)
The following data relates to three products XYZ
Required:
Calculate profit made by each product apportioning joint costs on;
i) Sales value bases
ii) Physical unit bases
Date posted: August 6, 2019. Answers (1)
- In a specific period production and cost data was as follows:(Solved)
In a specific period production and cost data was as follows: Production was 1,600 full complete units and 400 partly complete units. The degree of completion of the 400 units WIP was as follows:
Required:
a) Calculate total equivalent unit
b) Cost per unit of complete units
c) Show the value of W.I.P
Date posted: August 6, 2019. Answers (1)
- Using the data given below, show process 1 account where normal loss has a scrap value of sh1.8 per kilo.(Solved)
Using the data given below, show process 1 account where normal loss has a scrap value of sh1.8 per kilo.
In the manufacture of product vitality 2000 kgs of material at kshs 5kg were supplied to process 1. Labour cost amounted to sh 3,000 and production overheads sh 2,300, normal loss has been estimated at 10% . The actual product after process was 1750kg.
Date posted: August 6, 2019. Answers (1)