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Group Assignment

The document provides information on a cost and management accounting course for Bachelor of Commerce students. It lists 5 students enrolled in the course and their student numbers and assessment format. It also contains sample exam questions on standard costing systems, calculating a budgeted profit statement, determining variables for variances, and calculating various variances. The questions test understanding of concepts like normal, basic, and ideal standards, as well as calculations of sales volume, quantity, price, material, labor, variable overhead, and fixed overhead variances.

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Muzie Bhengu Goqolo
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44 views6 pages

Group Assignment

The document provides information on a cost and management accounting course for Bachelor of Commerce students. It lists 5 students enrolled in the course and their student numbers and assessment format. It also contains sample exam questions on standard costing systems, calculating a budgeted profit statement, determining variables for variances, and calculating various variances. The questions test understanding of concepts like normal, basic, and ideal standards, as well as calculations of sales volume, quantity, price, material, labor, variable overhead, and fixed overhead variances.

Uploaded by

Muzie Bhengu Goqolo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FACULTY OF COMMERCE

DEPARTMENT OF ACCOUNTING AND FINANCE

PROGRAM: BACHELOR OF COMMERCE HONOURS DEGREE IN ACCOUNTING


AND FINANCE

COURSE: COST AND MANAGEMENT ACCOUNTING II

COURSE CODE: COAF 2205

LECTURER: B DLAMINI

DUE DATE: 30 APRIL 2020

NAME SURNAME STUDENT # FORMAT


JULIET MURINDI L0192307Q CONVECTIONAL 2:2
MUZIWAKHE M GOQOLO L0191941S CONVECTIONAL 2:2
CAIN NDEBELE L0191129W CONVECTIONAL 2:2
TAMIA MATEMURA L0190756H CONVECTIONAL 2:2
PAMELA MPOFU L0191059Y CONVECTIONAL 2:2
(a) Three types of standard that a management accountant may consider when introducing a
standard costing system are:

Normal standard
These are such standards which are expected if normal circumstances prevail. Term normal
represents the normal conditions of the business in the absence of any unexpected fluctuations
either favorable or unfavorable. Even through normal standards are more of theoretical in nature
as reality cannot be sufficiently predicted with all its fluctuations in advance. Also,
circumstances may change in such a way that factors which were expected to be controllable are
not so controllable by the mangers. Thus it has limited application in today’s business
environment. However, normal standards acts as a good yardstick that represents challenging yet
attainable results and can be used by management in such environment which is simple in nature
and is not prone to great fluctuations

Basic standard
This is standard established considering those factors that are basic in nature and remain
unchanged over a long period of time and are altered only when the business operations change
significantly affecting the very basic foundations of the entity and nature of business. These
standards help compare business operations over a longer period of time. As basic standards are
not updated according to latest circumstances thus they are not used often as they cannot help in
short term period variance analysis. Basic standards are revised very rarely, and hence the
fluctuations in the costs and prices are not reflected in this standard.

Ideal standard
An ideal standard is a standard, which can be attained under the most favorable conditions. The
expected performance can be achieved only if all factors, such as material and labour prices,
level of performance of employees, highest output with best possible equipment and machinery,
highest level of efficiency and so on. In practice, it is very difficult to achieve this, as the
combination of all favorable factors is almost impossible. Hence the utility of this standard is that
it can be used for relatively long period of time without alteration. However, as the achievement
is nearly impossible, the employee may be frustrated due to the constant adverse variances.
Therefore, ideal standards are not meant to be achieved rather to act like a guiding star.

(b) Standard selling price= 4*2400*175+2*24000*10+2*24000*8.75

=$ 1 044 000

Cost/unit =1 044 000/24000

=$ 43.50

Add Mark-up = 30%*43.50

=$ 13.05

Therefore, selling price per unit= $43.50+13.05

=$ 56.55

Budgeted revenue= $56.55*24000

=$1 357 200

Therefore, budgeted profit= 1 357 200 – 1 044 00

=$ 313 200

Budgeted profit statement for ABC Ltd. for the month of March 2015

$
Budgeted revenue 1 357 200
Less: standard selling price 1 044 000

Budgeted profit 313 200


Determining all variables needed to calculate each variance

i) Budgeted selling price per unit= $56.55


ii) Actual selling price= $1 276 000/2200
= $58
iii) Budgeted units = 24000
iv) Actual units = 22000
v) Budgeted quantity for direct materials= 4*24000

=96000

vi) Actual quantity = 90000

vii) Standard materials price= $1.75 actual price= 162 000/90000


=$1.80
viii) Standard labour rate (hrs.)= $10 actual = 57600/48000
=$12
ix) Budgeted working hours = 2*24000 actual = 48000
=48000

X) Standard overhead rate= $8.25

(c) Variance calculation


i. SPV= actual units (actual price – standard price)

=22000 (58-56.55)

=$31900 favorable

ii. SVV= standard price (actual units-standard units)

=$56.55 (22000-24000)

=113 100 adverse


iii. MPV= actual quantity (standard price-actual price)

=22000 (56.55-58)

= $31 900

iv. MUV= standard price (standard quantity- actual quantity)

= $1.75 (96000-90000)

=10 500 adverse

v. LRV= actual hours (standard rate- actual rate)

= 48000 (10-12)

= $96 000 adverse

vi. LEV= standard rate (standard hours- actual hours)

= 10 (48000-48000)

=0

vii. Variable overhead efficiency= standard rate (standard quantity- actual quantity)

= $8.25 (24000-22000)

=$ 16 500 favorable

viii. Variable overhead expenditure= standard variable cost for standard units-actual over head

= (24000*20*8.25) – 350000
=$ 46 000 favorable

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