Sam Mendes Ltd is a manufacturing company which produces a varietyof products. The following information relates to one of its products -Product W:

The budgeted production is 24,000 units per annum evenly spreadthroughout the year, with each calendar month assumed to be equal. Marchis a bad month in terms of sales revenue and it is expected that saleswill only be 1,700 units during the month. Fixed overheads were expectedto be $144,000 per year and are absorbed on a labour hour basis.

Actual results for the month of March were that sales were 2,200units at a price of $90. There was no change in stock of finished goodsor raw materials.

The purchases during the month were 11,300 kg of material X at $2.80 per kg and 8,300 kg of material Y at $5.30 per kg.

4,800 labour hours were worked at a rate of $8.10 per hour and 1,600 hours at $8.30.

The actual variable overheads for the period were $33,000 and the fixed overheads were $12,500.

The company uses an absorption costing system and maintains its raw materials account at standard.

Required:

Calculate appropriate variances for the month of March in as muchdetail as possible and present an operating statement reconcilingbudgeted profit with actual profit.

You are not required to calculate mix or yield variances as SamMendes Ltd does not sub-analyse the material usage or labour efficiencyvariances.
 

Transcribed Image Text:

Standard cost data Selling price Direct Material X 100 5 kg @ $3/kg Direct Material Y 4 kg @ $5/kg Direct Labour Variable overheads 3 hrs @ $8/hr 3 hrs @ $6/hr 5220 15 24 18 77 Contribution per unit 23 Standard cost data Selling price Direct Material X 100 5 kg @ $3/kg Direct Material Y 4 kg @ $5/kg Direct Labour Variable overheads 3 hrs @ $8/hr 3 hrs @ $6/hr 5220 15 24 18 77 Contribution per unit 23

Answer rating: 100% (QA)

The 3month moving average demand forecast is a method used to smooth out fluctuations in data and id... View the full answer