- 20 Marks
IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis
Prepare overhead analysis sheet and calculate standard costing variances for Kack Ltd.
Question
a) The following information relates to the first quarter of operations for Kack Ltd:
| Machining | Assembling | Finishing | Stores | |
|---|---|---|---|---|
| Area occupied (sq. meters) | 12,000 | 18,000 | 8,000 | 2,000 |
| Plant at cost (GH¢000) | 600 | 100 | 200 | 100 |
| Number of employees | 200 | 400 | 100 | 100 |
| Direct labour hours | 16,000 | 30,000 | 4,000 | – |
| Direct wages (GH¢) | 32,000 | 60,000 | 8,000 | – |
| Machine hours | 32,000 | 4,000 | 4,000 | – |
| Number of requisitions on stores | 3,000 | 1,000 | 1,000 |
Allocated costs:
| Costs | Machining (GH¢) | Assembling (GH¢) | Finishing (GH¢) | Stores (GH¢) | Total (GH¢) |
|---|---|---|---|---|---|
| Indirect wages | 16,000 | 15,000 | 14,000 | 10,000 | 55,000 |
| Indirect materials | 3,000 | 2,400 | 6,000 | 10,000 | 21,400 |
| Maintenance | 3,000 | 6,000 | 1,000 | – | 10,000 |
| Power | 4,000 | 4,000 | 2,000 | – | 10,000 |
| Rent | 6,000 | 9,000 | 4,000 | 1,000 | 20,000 |
| Business rates | 6,000 | 9,000 | 4,000 | 1,000 | 20,000 |
| Insurance on building | 6,600 | 9,900 | 4,400 | 1,100 | 22,000 |
| Lighting and heating | 7,200 | 10,800 | 4,800 | 1,200 | 24,000 |
| Depreciation on plant | 12,000 | 2,000 | 4,000 | 2,000 | 20,000 |
| Wage-related costs | 8,960 | 16,800 | 2,240 | – | 28,000 |
| Factory administration | 3,500 | 7,000 | 1,750 | 1,750 | 14,000 |
| Insurance on plant | 10,800 | 1,800 | 3,600 | 1,800 | 18,000 |
| Cleaning of factory premises | 3,600 | 5,400 | 2,400 | 600 | 12,000 |
| Total | 90,660 | 99,100 | 54,190 | 30,450 | 274,400 |
(10 marks evenly spread)
Find Related Questions by Tags, levels, etc.
- Tags: Cost Allocation, Overhead Analysis, Standard Cost Card
- Level: Level 1
- Topic: Accounting for Overheads, Standard Costing and Variance Analysis
- Series: NOV 2020
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