MANAGEMENT ACCOUNTING DECISION & CONTROL

Amna
Registered Posts: 24
Hi
Is anyone explain the question?
The product being made by Tesco Ltd is budgeted to use 1.25 kg of material per unit at a cost of £7.80 per kg. During last month the company used 1140 kg to manufacture 950 units and the material price variance was £912 adverse. What is the actual price per kg of material? *
Thanks
Is anyone explain the question?
The product being made by Tesco Ltd is budgeted to use 1.25 kg of material per unit at a cost of £7.80 per kg. During last month the company used 1140 kg to manufacture 950 units and the material price variance was £912 adverse. What is the actual price per kg of material? *
Thanks
0
Answers
-
It's been a while since I've done this but I'm fairly sure it's like this:
Budgeted price of actual amount used = 1.2*7.8*950 = £8892
Actual price of actual amount used = X
Variance = -£912
8892 - X = -912
X = 9804
Price per kilo = 9804/1140 = £8.60
For these questions you need to work out what you are comparing. If it's price you need to fix the amount used and compare against the actual amount. If it's amount used you compare against the standard amount.
I always find the best way is to layout what you have and then work from there.AAT Level 4, MAAT
ACCA in progress
F4- Passed Aug 2020
F5- Passed Dec 2020
F6- Passed Sep 2020
F7- Passed June 2021
F8 - Passed Sep 2021
F9 - Passed June 2021
SBL
SBR - Passed Mar 22
ATX - Passed Dec 21
APM -0 -
Thanks for the answers
material is 1.25 kg, can we round up 1.2?0 -
Hi
is anyone know how to approach this question
The direct labour efficiency variance has been accurately calculated for the production of 2000 units in week 9 as £450 Adverse. The production took 445 hours. The standard labour time to make one unit is 12 minutes. What is the standard labour rate per hour?
Thanks0 -
There is no rounding the 1.25kg is the budgeted amount the 1.2kg is the actual amount used per unit. (1140/950=1.2)Amna said:Thanks for the answers
material is 1.25 kg, can we round up 1.2?AAT Level 4, MAAT
ACCA in progress
F4- Passed Aug 2020
F5- Passed Dec 2020
F6- Passed Sep 2020
F7- Passed June 2021
F8 - Passed Sep 2021
F9 - Passed June 2021
SBL
SBR - Passed Mar 22
ATX - Passed Dec 21
APM -0 -
Similar question to before but lightly more complicated.
y = standard labour rate per hour
Standard rate @ Actual time = 445y
Standard rate @ standard time = 12/60 x 2000 x y = 400y
Variance = -450
Efficiency so equation is
Standard rate @ standard time - standard [email protected] actual time = variance
400y - 445y = -450
y(400-445) = -450
y = -450 / (-45)
y= £10
If you accidentally flip the figures you can think whether it makes sense to check. Variance was adverse so the expected time (standard) must have been lower than the actual time.AAT Level 4, MAAT
ACCA in progress
F4- Passed Aug 2020
F5- Passed Dec 2020
F6- Passed Sep 2020
F7- Passed June 2021
F8 - Passed Sep 2021
F9 - Passed June 2021
SBL
SBR - Passed Mar 22
ATX - Passed Dec 21
APM -0 -
Thank you so much Pian
where can I study this topic, I am struggling with how to attempt questions?0 -
I'd start with the budgeting module that has variances and introduces them in a nicer way before it gets more complicated in decision and control.
I'm sure there will be some videos about it online as well. What materials do you have access to I might be able to point you to the correct part of those?AAT Level 4, MAAT
ACCA in progress
F4- Passed Aug 2020
F5- Passed Dec 2020
F6- Passed Sep 2020
F7- Passed June 2021
F8 - Passed Sep 2021
F9 - Passed June 2021
SBL
SBR - Passed Mar 22
ATX - Passed Dec 21
APM -0