Good-4-U Ltd manufactures children’s toys. The standard cost of production is as follows:

                                                                                                GHS

            Materials          (2kg @ GHS0.5 per unit)                    1.00

            Labour             (2hrs @ GHS2.00 per hour)                4.00

            Variable Overheads (2hrs @ GHS1.00 per hour)       2.00

            Fixed Overheads (2hrs @ GHS0.50 per hour)                        1.00

            Total cost per unit                                                       8.00

The budget on which the above standard is based if for the production and sales of 2000 toys per year to be sold for GHS12.00 each.

The actual results for the year ended 31^st December 2019 were as follows:

                                                                                                GHS

            Materials          5000kg                                                2,700

            Labour             (5,200hrs paid and 5100 worked)       10,000

            Variable overhead                                                       3,800

            Fixed overhead                                                                        2,250

2,200 toys were produced and 2,100 were sold for GHS13.00 each.

At the end of the period, there were 100kg of raw materials in stock. All stocks were valued at standard cost. There were no opening stocks.

Required

1. Calculate the budgeted and the actual profits for the year ended 31^st December 2019 using full costing method.
2. Analyse the variance between actual and standard results
3. Prepare appropriate statement reconciling budgeted and actual profits using the full costing method.

Answer rating: 100% (QA)

Budgeted and actual profit for the year ended 31 st December 2019 using full costing method Budgeted Profit 8000 Actual Profit 9404 Working Budgeted p... View the full answer