Budgeted profit – NBC Institute

PM – May 2017 – L2 – SA – Q4 – Standard Costing and Variance Analysis

Calculate budgeted profit and perform variance analysis for Dabens Nigeria's job costing system.

Question

Dabens Nigeria Limited’s job costing system includes two direct cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products based on standard direct manufacturing labor hours (SDMLH). At the beginning of 2016, Dabens adopted the following standards for manufacturing costs and sales:

S/N	Cost Details	Input	Cost per Output Unit (N)
1	Direct Materials	3 kg at N500	1,500
2	Direct Manufacturing Labor	5 hours at N200	1,000
3	Manufacturing Overhead: Variable	N120 per SDMLH	600
	Manufacturing Overhead: Fixed	N160 per SDMLH	800
4	Unit Manufacturing Cost		3,900
5	Standard Profit Margin		1,300
6	Standard Selling Price		5,200

The denominator level for total manufacturing overhead per month in 2016 is 40,000 direct manufacturing labor hours. Dabens’ flexible budget for January 2016 was based on this denominator level. January records show the following data:

Direct materials purchased: 25,000 kg at N520 per kg
Direct materials used: 23,100 kg
Direct manufacturing labor: 40,100 hours at N190 per hour
Total actual manufacturing overhead (fixed and variable): N12,000,000
Actual production/sales: 7,800 output units
Actual selling price: N5,350

The proportion of actual variable and fixed overhead costs is consistent with the standard.

Required:

a. Calculate the budgeted profit of the company for January 2016.
(2 Marks)

b. Calculate the following variances for January 2016:

i. Direct material variances
ii. Direct manufacturing labor variances
iii. Variable manufacturing overhead variances
iv. Fixed manufacturing overhead variances
v. Sales variances
(10 Marks)

c. Prepare a statement reconciling the actual profit with the budgeted profit.
(8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeted profit, Cost Variance, Standard Costing, Variance Calculation
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2017

MA – May 2017 – L2 – Q5 – Standard costing and variance analysis

Prepare a statement reconciling budgeted profit with actual profit, showing individual variances in detail.

Question

You are the Management Accountant of ABS Limited. The following computer printout shows details relating to June 2017.

Description	Actual	Budget
Sales volume (units)	4,900	5,000
Selling price per unit (GH¢)	11.00	10.00
Production volume (units)	5,400	5,000
Direct materials:
– Quantity (kg)	10,600	10,000
– Price per kg (GH¢)	0.60	0.50
Direct labour:
– Hours per unit	0.55	0.50
– Rate per hour (GH¢)	3.80	4.00
Fixed overhead:
– Production (GH¢)	10,300	10,000
– Administration (GH¢)	3,100	3,000

ABS Limited uses a standard absorption costing system. There was no opening or closing work-in-progress.

Required:

Prepare a statement that reconciles the budgeted profit with the actual profit for June 2017, showing individual variances in detail. (15 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Actual profit, Budgeted profit, Profit reconciliation, Standard Costing, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2017

PM – May 2017 – L2 – SA – Q4 – Standard Costing and Variance Analysis

Calculate budgeted profit and perform variance analysis for Dabens Nigeria's job costing system.

Question

S/N	Cost Details	Input	Cost per Output Unit (N)
1	Direct Materials	3 kg at N500	1,500
2	Direct Manufacturing Labor	5 hours at N200	1,000
3	Manufacturing Overhead: Variable	N120 per SDMLH	600
	Manufacturing Overhead: Fixed	N160 per SDMLH	800
4	Unit Manufacturing Cost		3,900
5	Standard Profit Margin		1,300
6	Standard Selling Price		5,200

Direct materials purchased: 25,000 kg at N520 per kg
Direct materials used: 23,100 kg
Direct manufacturing labor: 40,100 hours at N190 per hour
Total actual manufacturing overhead (fixed and variable): N12,000,000
Actual production/sales: 7,800 output units
Actual selling price: N5,350

The proportion of actual variable and fixed overhead costs is consistent with the standard.

Required:

a. Calculate the budgeted profit of the company for January 2016.
(2 Marks)

b. Calculate the following variances for January 2016:

i. Direct material variances
ii. Direct manufacturing labor variances
iii. Variable manufacturing overhead variances
iv. Fixed manufacturing overhead variances
v. Sales variances
(10 Marks)

c. Prepare a statement reconciling the actual profit with the budgeted profit.
(8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeted profit, Cost Variance, Standard Costing, Variance Calculation
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2017

MA – May 2017 – L2 – Q5 – Standard costing and variance analysis

Prepare a statement reconciling budgeted profit with actual profit, showing individual variances in detail.

Question

You are the Management Accountant of ABS Limited. The following computer printout shows details relating to June 2017.

Description	Actual	Budget
Sales volume (units)	4,900	5,000
Selling price per unit (GH¢)	11.00	10.00
Production volume (units)	5,400	5,000
Direct materials:
– Quantity (kg)	10,600	10,000
– Price per kg (GH¢)	0.60	0.50
Direct labour:
– Hours per unit	0.55	0.50
– Rate per hour (GH¢)	3.80	4.00
Fixed overhead:
– Production (GH¢)	10,300	10,000
– Administration (GH¢)	3,100	3,000

ABS Limited uses a standard absorption costing system. There was no opening or closing work-in-progress.

Required:

Prepare a statement that reconciles the budgeted profit with the actual profit for June 2017, showing individual variances in detail. (15 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Actual profit, Budgeted profit, Profit reconciliation, Standard Costing, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2017

Question Tag: Budgeted profit

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PM – May 2017 – L2 – SA – Q4 – Standard Costing and Variance Analysis

Calculate budgeted profit and perform variance analysis for Dabens Nigeria's job costing system.

MA – May 2017 – L2 – Q5 – Standard costing and variance analysis

Prepare a statement reconciling budgeted profit with actual profit, showing individual variances in detail.

PM – May 2017 – L2 – SA – Q4 – Standard Costing and Variance Analysis

Calculate budgeted profit and perform variance analysis for Dabens Nigeria's job costing system.

MA – May 2017 – L2 – Q5 – Standard costing and variance analysis

Prepare a statement reconciling budgeted profit with actual profit, showing individual variances in detail.

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PM – May 2017 – L2 – SA – Q4 – Standard Costing and Variance Analysis

Calculate budgeted profit and perform variance analysis for Dabens Nigeria's job costing system.

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MA – May 2017 – L2 – Q5 – Standard costing and variance analysis

Prepare a statement reconciling budgeted profit with actual profit, showing individual variances in detail.

You're reporting an error for "MA – May 2017 – L2 – Q5 – Standard costing and variance analysis"

PM – May 2017 – L2 – SA – Q4 – Standard Costing and Variance Analysis

Calculate budgeted profit and perform variance analysis for Dabens Nigeria's job costing system.

You're reporting an error for "PM – May 2017 – L2 – SA – Q4 – Standard Costing and Variance Analysis"

MA – May 2017 – L2 – Q5 – Standard costing and variance analysis

Prepare a statement reconciling budgeted profit with actual profit, showing individual variances in detail.

You're reporting an error for "MA – May 2017 – L2 – Q5 – Standard costing and variance analysis"

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