Financial and Management Accounting for Managers

AC1010 Financial and Management Accounting for Managers

Course Work for Semester 2

Submitted by: Emerson K.Yip
G-number:
Date: May 1, 2013

Table Content :

Page

1. Calculation of Standard Cost per unit for each of the products 3

2. Reconciliation Statement between Standard cost at actual 7 production and Actual Cost of Production.

3. List of possible reasons for each of the variance arising 10

4. Write a brief note outlining the advantages and disadvantages 13 of using variance analysis as a means of controlling a business

Question 1. Calculation of Standard Cost per unit for each of the products.

Part 1 :

Standard Cost of Deluxe Model : ₤430.20/unit

Working :

Deluxe Model

Glass
Wood
Direct Material/unit
102.40
179.00

Skilled
Unskilled
Direct Labor
105.60
43.20

Total Per Unit Direct Material Cost
281.40
= 102.4+179
Total Per Unit Direct Labor Cost
148.80
= 105.6+43.2

Total Per Unit Prime Cost
430.20
= 281.4+148.8

Note :

Computation of Direct Material Cost per unit

Direct Material Cost / Unit = material cost of glass + material cost of wood
= 12.80x8 + 17.90 x 10
= 102.4 + 179
= ₤281.40/unit
Computation of Direct Labor cost per unit

Direct Labor Cost /unit = skilled labor cost + unskilled labor cost
= 6.6 x 16 + 5.4 x 8
= 105.60+43.20
= ₤148.80/unit

Total prime cost /unit = Direct labor cost /unit + Direct material cost/unit
= 281.40 + 148.80
= ₤430.20/unit
Part 2

Standard Cost of Standard Model :₤309.20/unit

Working :

Standard Model

Plasic
Metal
Direct Material/unit
118.00
52.00

Skilled
Unskilled
Direct Labor
52.80
86.40

Total Per Unit Direct Material Cost
170.00
= 118+52
Total Per Unit Direct Labor Cost
139.20
= 86.4+52.8

Total Per Unit Prime Cost
309.20