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    Hilary Gaurea
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    The document contains calculations related to production variances, break even analysis, and profitability at different sales levels for three different questions. For question 1, material, labor, and production variances are calculated based on standard and actual quantities of material used, labor hours worked, and units produced. Variances include material cost, price, and usage variances as well as labor cost and rate variances. Question 2 calculates profit volume ratio, break even point, sales required to earn a target profit, and actual profit at a given sales level using the profit volume ratio. Question 3 repeats the calculations for a different product, determining its break even point, profit at 20% above the break even sales, and

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    The document contains calculations related to production variances, break even analysis, and profitability at different sales levels for three different questions. For question 1, material, labor, and production variances are calculated based on standard and actual quantities of material used, labor hours worked, and units produced. Variances include material cost, price, and usage variances as well as labor cost and rate variances. Question 2 calculates profit volume ratio, break even point, sales required to earn a target profit, and actual profit at a given sales level using the profit volume ratio. Question 3 repeats the calculations for a different product, determining its break even point, profit at 20% above the break even sales, and

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    16 views3 pages

    Solution

    Uploaded by

    Hilary Gaurea
    The document contains calculations related to production variances, break even analysis, and profitability at different sales levels for three different questions. For question 1, material, labor, and production variances are calculated based on standard and actual quantities of material used, labor hours worked, and units produced. Variances include material cost, price, and usage variances as well as labor cost and rate variances. Question 2 calculates profit volume ratio, break even point, sales required to earn a target profit, and actual profit at a given sales level using the profit volume ratio. Question 3 repeats the calculations for a different product, determining its break even point, profit at 20% above the break even sales, and

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    of 3

    Question 1

    Actual Production  1,000 units


    For Material
    Standard Actual
    Quantity Price Cost Quantity Price Cost
    8,000 25.00 2,00,000 7,840 27.00 2,11,680

    Std Input
    Standard Qty for ActualOutput = × actual output
    Std output
    40
    ¿ × 1,000
    5
    ¿ 8,000 kgs .
    For Labour
    Standard Actual
    Hours Rate Cost Hours Rate Cost
    20,000 2.5 50,000 19,800 2.60 51,480

    Std Hours
    Standard Hours for Actual Output = × actual output
    Std output
    100
    ¿ ×1,000
    5
    ¿ 20 , 000 Hours.
    Material Variances
    Material Cost Variances = Standard cost for actual output – actual
    cost
    = 2,00,000 – 2,11,680
    = 11,680 (A)
    Material Price Variances = (SP – AP)  AQ
    = (25 – 27)  7840
    = 15,680 (A)
    Material Usage Variances = (SQ – AQ)  SP
    = (8,000 – 7,840)  25
    = 4,000 (F)

    Labour Variances
    Labour Cost Variance = Standard cost for actual output – actual cost
    = 50,000 – 51,480
    = 1,480 (A)
    Labour Rate Variance = (SR – AR)  AH
    = (2.50 – 2.60)  19,800
    = 1,980 (A)
    Labour Time Variance = (SH – AH)  SR
    = (20,000 – 19,800)  2.5
    = 500 (F)

    Question 2
    Change∈Profit
    (1) P rofit Volumn Ratio= × 100
    Change∈Sales
    2,00,000
    ¿ ×100
    10,00,000
    ¿ 20 %
    (2) ¿ Expenses=Contribution−Profitd
    ¿ ( 20,00,000 ×20 % )−2,00,00 0
    ¿ 2,00,00 0
    ¿Cost
    (3) BEP ( ¿ Rs . )=
    Profit volumn ratio

    2,00,000
    ¿
    20 %
    ¿ 10,00,00 0

    (4) Sales to Earn the profit of Rs. 5,00,000


    Desired Contribution=¿ Cost + Required Profit
    ¿ 2,00,000+5,00,000
    ¿ 7,00,000

    Desired Contribution
    Desired Sales=
    profit volumn ratio

    7,00,000
    ¿
    20 %
    ¿ 35,00,000

    (5) Profit When Sales are 15,00,000


    Contribution=Sales× Profit Volumn Ratio
    ¿ 15,00,000 ×20 %
    ¿ 3,00,000

    Profit=Contribution−Profit
    ¿ 3,00,000−2,00,000
    ¿ 1,00,000

    Question 3

    Selling Price 20
    (-) Variable Cost 15
    Contribution 5

    Contribution
    Profit Volumn Ratio= × 100
    Sales

    5
    ¿ ×100
    20

    ¿ 25 %
    ¿ cost
    BEP ( ¿ Rs . )=
    Profit Volumn Ratio

    20,000
    ¿
    25 %

    ¿ 80,000

    Calculation of Profit when sales are 20% BEP point


    Sales=BEP+20 %

    ¿ 80,000+20 %

    ¿ 96,000

    Profit=( sales× profit volumn ratio )−¿ Cost

    ¿ ( 96,000 ×25 % )−20,000

    ¿ 4,000

    Sales required to earn profit of Rs. 12,000


    Desired Contribution=¿ Cost + Profit

    ¿ 20,000+12,000

    ¿ 32,000

    Desired Contribution
    Desired Sales=
    Profit Volumn Ratio

    32,000
    ¿
    25 %

    ¿ 1,28,000

    Question 4
    (Please copy the answers from our book)

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