Sales Variances – NBC Institute

PM – May 2018 – L2 – Q2 – Standard Costing and Variance Analysis

Calculate sales variances and discuss their significance in standard costing.

Question

Nwokocha and Sons Bakery Limited uses absorption costing technique in its
accounting system. The company produces and sells three bakery products, namely
four corner loaf (F), round corner loaf (R) and executive loaf (E) which are
substitutes for each other. The following standard selling prices and cost data
relate to these three products:

Annual budgeted fixed production overhead was N3,840,000. The company policy
is that overhead will be absorbed on a machine hour basis. The standard machine
hour for each product and the monthly budgeted level of production and sales for
each product are as follows;

Actual volumes and selling prices for the three products in a particular month are
as follows:

a. Calculate the following variances for overall sales for the particular month:
i. Sales price variance; (2 Marks)
ii. Sales volume profit variance; (2 Marks)
iii. Sales mix profit variance; and (3 Marks)
iv. Sales quantity profit variance. (3 Marks)
b. Determine the monthly budgeted profit for the company. (6 Marks)
c. Discuss the significance of mix variances in a standard costing system?
(4 Marks)

Answer

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Tags: Absorption Costing, Bakery, Performance Evaluation, Sales Variances
Level: Level 2

Topic: Variance Analysis
Series: MAY 2018

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

Question

b) Zip Ltd, a premium food manufacturer, is reviewing its operations for a three-month period for 2019. The company operates a standard marginal costing system and manufactures one product, ZP, for which the following standard revenue and cost data per unit of product is available:

Selling price: GH¢12.00
Direct material A: 2.5 kg at GH¢1.70 per kg
Direct material B: 1.5 kg at GH¢1.20 per kg
Direct labour: 0.45 hours at GH¢6.00 per hour
Fixed production overheads for the three-month period were expected to be GH¢62,500.

Actual data for the three-month period was as follows:

Sales and production: 48,000 units of ZP were produced and sold for GH¢580,800
Direct material A: 121,951 kg were used at a cost of GH¢200,000
Direct material B: 67,200 kg were used at a cost of GH¢84,000
Direct labour: Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of GH¢117,120
Fixed production overheads: GH¢64,000

Required: Calculate the following variances:

i) Sales volume contribution and sales price variances
ii) Price, mix, and yield variances for each material
iii) Labour rate, labour efficiency, and idle time variances

Answer

Find Related Questions by Tags, levels, etc.

Tags: Labour Variances, Material variances, Sales Variances, Standard Costing, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: NOV 2020

PM – May 2018 – L2 – Q2 – Standard Costing and Variance Analysis

Calculate sales variances and discuss their significance in standard costing.

Question

Actual volumes and selling prices for the three products in a particular month are
as follows:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption Costing, Bakery, Performance Evaluation, Sales Variances
Level: Level 2

Topic: Variance Analysis
Series: MAY 2018

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

Question

Selling price: GH¢12.00
Direct material A: 2.5 kg at GH¢1.70 per kg
Direct material B: 1.5 kg at GH¢1.20 per kg
Direct labour: 0.45 hours at GH¢6.00 per hour
Fixed production overheads for the three-month period were expected to be GH¢62,500.

Actual data for the three-month period was as follows:

Sales and production: 48,000 units of ZP were produced and sold for GH¢580,800
Direct material A: 121,951 kg were used at a cost of GH¢200,000
Direct material B: 67,200 kg were used at a cost of GH¢84,000
Direct labour: Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of GH¢117,120
Fixed production overheads: GH¢64,000

Required: Calculate the following variances:

i) Sales volume contribution and sales price variances
ii) Price, mix, and yield variances for each material
iii) Labour rate, labour efficiency, and idle time variances

Answer

Find Related Questions by Tags, levels, etc.

Tags: Labour Variances, Material variances, Sales Variances, Standard Costing, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: NOV 2020

Question Tag: Sales Variances

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PM – May 2018 – L2 – Q2 – Standard Costing and Variance Analysis

Calculate sales variances and discuss their significance in standard costing.

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

PM – May 2018 – L2 – Q2 – Standard Costing and Variance Analysis

Calculate sales variances and discuss their significance in standard costing.

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

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PM – May 2018 – L2 – Q2 – Standard Costing and Variance Analysis

Calculate sales variances and discuss their significance in standard costing.

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MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

You're reporting an error for "MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis"

PM – May 2018 – L2 – Q2 – Standard Costing and Variance Analysis

Calculate sales variances and discuss their significance in standard costing.

You're reporting an error for "PM – May 2018 – L2 – Q2 – Standard Costing and Variance Analysis"

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

You're reporting an error for "MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis"

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