QUESTION 3 25 MARKS Havana Limited plans to sell 10 000 units during the period 1 October to 31 December 2016.
Additional information is given below:
Inventory levels are as follows: Completed products
Raw material X
Raw material Y 30 September 2016
1 000 units
10 000 kg
8 000 kg 31 December 2016
2 000 units
5 000 kg
10 000 kg All inventory is issued according to the FIFO method
Three labour hours are needed to manufacture one completed unit. Workers earn N$20 per
hour
The cost of raw material X is N$1.35 per kg. Raw material Y is purchased at N$0.50 per kg
Two kg of raw material X and Three kg of raw material Y are required for the production of
one unit of the finished product
Manufacturing overhead costs are allocated at a rate of N$6 per direct labour hour
Finished products are sold at N$150 per unit REQUIRED: Using The Information Above Prepare The Following Budgets
3.1
3.2
3.3
3.4
3.5 Sales Budget
Production Budget
Raw Materials Purchases Budget
Labour Budget
Closing Inventory Budget (All Closing Inventories)
Cost of Goods Manufactured and Cost of Goods Sold Budget
3.6
Value for the last quarter
TOTAL MARKS FOR QUESTION 3 MARKS
2
4
6
3
4 in total 6
25 QUESTION 4 25 MARKS Tsumeb Leather Cc manufactures and sells a single product and uses a standard costing
system. The standard costs were set as follows for the current accounting period:
N$
40 Kg of Material @ N$2.5 60 000 25 hours of Direct Labour @ N$3.8 107.50 Overheads: 30 Machine Hours at N$2.5 75.00 Standard Cost 242.50 Actual Results:
Material Purchased: 90 000 Kg @ N$2.55 per Kg (all Material Purchased was Issued to
production)
Direct Labour Cost: 54 000 Hours @ N$4 per hour
Actual Overheads cost: N$ 20 000
Credit Sales: 1950 units @ N$350.00 per unit
2000 units were produced. REQUIRED: Calculate The Following:
4.1
Material Price Variance
4.2
Material Quantity Variance
4.3
Labour Rate Variance
4.4
Labour Efficiency Variance
4.5
Give any three reasons that cause labor rate variance obtained in 5.3
4.6
List any three advantages of standard costing
TOTAL MARKS FOR QUESTION 4 MARKS
4
4
4
4
6
3
25