2. Morrowitz Limited makes a single product in one of its divisions. Below is a statement...

  

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2. Morrowitz Limited makes a single product in one of its divisions. Below is a statement of the variable cost structure of a single unit. Raw material Direct labour Variable overhead The standard costing system used by the company assumes that the company will make a profit (after fixed costs) of £2.04 per unit by selling 70,000 units for £10.40 each. Variable overhead is charged on the basis of labour hours. The actual profit statement for the sale of 75,000 units was as follows: £ 765,000 Sales Raw material Direct labour E 2.70 (The standard cost of raw material is £9 per kg) (The standard cost of labour is £20 per hour) 2.00 1.50 (The standard variable overhead cost is £15 per hour) 6,20 Variable overhead Variable cost Contribution 218,550 143,375 122,450 484,375 280.625 The actual profit statement for the sale of 75,000 units was as follows: £ 765,000 Sales Raw material Direct labour Variable overhead Variable cost Contribution Fixed cost Profit 218,550 143,375 122,450 484,375 280,625 155,000 125,625 Additional information: The actual material cost is £9.40 per kg. The actual labour cost is £ 18.50 per hour. Required: Calculate the relevant price and volume variances to form a statement of reconciliation between the standard profit on these sales and the actual profit achieved. 2. Morrowitz Limited makes a single product in one of its divisions. Below is a statement of the variable cost structure of a single unit. Raw material Direct labour Variable overhead The standard costing system used by the company assumes that the company will make a profit (after fixed costs) of £2.04 per unit by selling 70,000 units for £10.40 each. Variable overhead is charged on the basis of labour hours. The actual profit statement for the sale of 75,000 units was as follows: £ 765,000 Sales Raw material Direct labour E 2.70 (The standard cost of raw material is £9 per kg) (The standard cost of labour is £20 per hour) 2.00 1.50 (The standard variable overhead cost is £15 per hour) 6,20 Variable overhead Variable cost Contribution 218,550 143,375 122,450 484,375 280.625 The actual profit statement for the sale of 75,000 units was as follows: £ 765,000 Sales Raw material Direct labour Variable overhead Variable cost Contribution Fixed cost Profit 218,550 143,375 122,450 484,375 280,625 155,000 125,625 Additional information: The actual material cost is £9.40 per kg. The actual labour cost is £ 18.50 per hour. Required: Calculate the relevant price and volume variances to form a statement of reconciliation between the standard profit on these sales and the actual profit achieved.

Answer rating: 100% (QA)

SUMMARISATION OF DETAILS Raw material required for 1 unit 030 KG Time required for 1 unit 010 Hour S... View the full answer