# Level 4 - Management Accounting Decision & Control 2016

SigitaGib
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**6**
I need some help to work out assessment task 2 online. The question:

Budgeted variable costs for the manufacture of 250 barrels.

Cost per unit £ Budgeted Cost£

Materials 36.00 9,000

Direct Labour 22.50 5,625

Variable overhead 10.50 2,625

Total cost 17,250

Actual production for the period was 300barrels and the total variances as follows:

Total variance£

Materials 1,200F

Direct Labour 390A

Variable Overhead 210F

During the period, the actual cost of material was £10 per kg and the standard quantity per unit was 3kg

420 actual hours were worked.

The standard labour time per unit was 1.5 hours.

Calculate Materials:

Actual Material Cost

Material Price Variance

Material Usage Variance

Standard Material Cost Of Production

Calculate Variable Overhead:

Actual Variable Overhead Cost

Variable Overhead Expenditure Variance

Variable Overhead Efficiency Variance

Standard Variable Overhead Cost Of Production

Budgeted variable costs for the manufacture of 250 barrels.

Cost per unit £ Budgeted Cost£

Materials 36.00 9,000

Direct Labour 22.50 5,625

Variable overhead 10.50 2,625

Total cost 17,250

Actual production for the period was 300barrels and the total variances as follows:

Total variance£

Materials 1,200F

Direct Labour 390A

Variable Overhead 210F

During the period, the actual cost of material was £10 per kg and the standard quantity per unit was 3kg

420 actual hours were worked.

The standard labour time per unit was 1.5 hours.

Calculate Materials:

Actual Material Cost

Material Price Variance

Material Usage Variance

Standard Material Cost Of Production

Calculate Variable Overhead:

Actual Variable Overhead Cost

Variable Overhead Expenditure Variance

Variable Overhead Efficiency Variance

Standard Variable Overhead Cost Of Production

0

## Comments

1916191Actual Material CostTotal Material Variance= Actual Cost vActual Production @ std qty per unit @ std price per kgwe know the above formula, and we know the variance and can work out the other..

Total Material Variance =

1,200 FActual production of 300 units should have used 900kg @ £12 per kg =

£10,800Std qty is 3kg per unit. 300 unit x 3kg per unit = 900kg. Each kg costs £12per kg (we know budget production of 250 units is expected to use 750kg (3kg per unit) and 750kg have a budgeted cost of £9000, therefore std price is £9000/750kg = £12 per kg).

Simply Budgeted unit cost is £9000/250 units = £36 per unit, Actual production of 300 units is expected to cost 300 x £36 =

£10,800Putting these two figures into the formula:

1,200F= Actual Cost v£10,800These means actual cost must be £1200 less than the budgeted cost, hence

actual material cost is

£9600Material Price VarianceMaterial Price Variance =

Actual material cost v Actual qty@std priceActual cost we just worked out is

£9600.We are told that actual cost of material is £10 per kg, therefore £9600/£10 per kg = 960 kg. Actual qty of 960kg is expected to cost £11,520 (at std price of £12 per kg).

Material Price Variance = £9600 v £11,520 =

£1,920 FMaterial Usage VarianceMaterial Usage Variance =

Actual qty @ std pricevActual production @ std qty @ std priceYou have already worked out the figures in bold.

Material Usage Variance = £11,500 + £10,800=

£720 AStandard Material Cost of ProductionI am guessing this is asking for the "standard material cost of

actualproduction' The wording isn't clear but the answer you would have had to work out already£10,800, is this the answer?191This unit really test your understanding of the variances so it's important you learn this thoroughly.

As I am used to my own short hand it was difficult to type out an explanation so I hope I haven't confused you further.

Good luck.

667191If you let me have your email address I am happy to share my notes on the variances. I know I can embed images onto the post but busy with work and studies to fiddle with it.

I don't know if my notes will help or confuse you further, it's just a way I lay out the calculations, in shorthand because you haven't got the time in the exams. If you are only having problems with remembering the calculations and can apply them to the questions then it may help.

You'll see a pattern, that for each you only have to memorise 3 calculations and not 6. and that basically the material, labour and variable overhead variances are very similar, so rather than remembering 18 calculations it's really only 3, the concepts are the same for each set.

My trick is I visually remember each one it its order, always price, usage and then total for material. Rate, efficiency and then total for labour etc. There is a distinct pattern and with the stressful exam conditions I don't need the panic of remembering which figure goes where.

The fixed overhead variances are a bit different though.

Good luck with your exam next week!

6191191I haven't said what is adv or fav because I think that its obvious and this would have been covered in L3. My advise to you is do more questions. Have you got exam or revision kits from Kaplan or BPP or Osborne? They will give you plenty of questions on one specific area. At the moment you are attempting exam type questions (which is good) but they throw a lot into one question which is confusing if you don't know the basics.

So i strongly recommend you get hold of a revision/exam if you haven't got one already and build on your knowledge from there first. You have two weeks so enough time.

67my email is : [email protected]

Thank you

191I just emailed the notes to you. Let me know if you dont receive it and I'll try again this evening.

77Task 8a-

Question= The maximum profit from the optimal production plan would be?

Answer=1785 not sure how this is worked out?

Task 9c-

Question=To the nearest whole units, the required sales volume is?

Answer=25217 units, not sure how this is worked out?

Any help would be much appreciated. Thanks so much.

139Reduced selling price per unit: £17.00

Target net profit per unit (£17 x 25%): £4.25

Target total cost per unit (£17 - £4.25): £12.75

Expected variable cost per unit (£140k/£20k): £7.00

Target fixed cost per unit (£12.75 - £7): £5.75

Required sales volume:

Total fixed costs / Target fixed cost per unit

£145,000 / £5.75 = 25217

139Product X Profit: £414

Product Y Profit: £660

Product Z Profit: £800

Total profit: £1874

However, X was budgeted at 407 units meaning we still incur fixed costs for the 207 units @ £0.43/unit:

207 x £0.43 = £89.01

£1874 - £89.01 = £1784.99 therefore £1785

...and in doing this realised I did it wrong in my MDCL exam! Oops

7777Has anyone re-sit the D&C exam yet?just got my results and got 64% really devastated. First fail in my life.

What sort of questions you had? Any tips or advice?

Many thanks

69sorry to hear. I failed my first exam as well with 69%. I also made an appeal but didn't work it got rejected it is really frustrated.

My exam didn't go that bad i had tasks 3, 8,9 exactly like assessment 2 rest of them was about standard costing lots of tricks also try to learn fixed costs variances. and learn thoroughly asset turnover.

I'm going to re-sits soon if you can share with me how was your exam it will be great help.

Thanks

77Many thanks for your message. I am sorry that you have failed too. I am sure you will pass next time. I am probably re-sitting mine end of October now because of other exam and life commitments but of course I will share my experience. Can you please also let me know if you re-sit it before me that would be awesome. I think some of my class mates might be re-sitting soon so I will ask them and let you know. Good luck with your exam (s).

69Thanks for wishing me good luck.

Good luck to you too.

77