Kings Ltd makes an electronic device for finding lost keys, which it has patented under the trademark 'Gonkeys'. The product passes through two processes and the budget for the production of 10 000 Gonkeys is as follows.

Required 

(a) Prepare budgeted accounts for processes 1 and 2 to show the cost of producing 10 000 Gonkeys. The actual production for process 1 was 10 000 Gonkeys. In process 2, completed production was 9000 Gonkeys, and 1000 Gonkeys were completed as to 50% of material and wages. 

(b) Prepare a flexed budget for process 2 based on actual production.

Actual costs per Gonkey were as follows.

(c) Prepare ledger accounts for processes 1 and 2 based on actual expenditure 

(d) Calculate the following variances for process 1 

(i) Material price 

(ii) Material usage 

and the following variances for process 2 

(iii) Labour efficiency 

(iv) Labour rate. 

(e) State four advantages of using a system of standard costs.

Transcribed Image Text:

Costs per Gonkey Material Cost of material per kg/litre Labour hours per Gonkey Labour rate per hour Production overhead absorption 25 Process 1 ANAT 2 kg $8 2018 2 $10 VENT hudaljenommen $20 per $20 per labour/hour PROS Process 2 4 litres $6 Fiz 4 AVE $12 MUNT $23 per labour/hour