WE WRITE CUSTOM ACADEMIC PAPERS

100% Original, Plagiarism Free, Tailored to your instructions

Order Now!

Portfolio 5 Due Monday 17 November

Assignment Requirements
 
Portfolio 5 Due Monday 17 November
 
Question 1
Background
Blair Ltd produces a single product – Product A. It uses a standard variable costing system for budgeting, planning and control. All finished goods stock is valued at standard variable for internal reporting purposes.
Budget for September 2008
The company budgeted to produce 5,800 units of Product A in September 2008. 600 of these were intended to facilitate a planned increase in finished goods stock levels. The budgeted selling price per unit was €102. Budgeted variable production costs for September 2008 were as follows:
Direct Material Cost                        150,800
Direct Labour Cost                           174,000
Variable Overheads                        69,600
394,400
The standard quantity of material required per unit of Product A is 4kgs. Material is purchased as required for processing on a just-in-time basis. Each unit of Product A requires 2 standard hours of direct labour. The standard cost for variable overhead is calculated on the basis of euros per direct labour hour. Budgeted fixed production overheads for the financial year were €1,560,000 and these are expected to be incurred evenly throughout the year. Similarly it is expected that annual budgeted marketing and administration of €324,000 would be incurred evenly throughout the year.
Actual Production and Sales for September 2008
The company actually sold 5,400 units thus generating sales revenue of €561,600.
The following variable costs were incurred:
Direct Material Cost                        179,520
Direct Labour Cost                           186,000
Variable Overheads                        76,880
442,400
The actual purchases cost per kg of material was €0.30 in excess of the standard. During September 300 kgs of material were damaged at the start of the production process and were rendered unusable. The actual average wage rate for September was €15.50 per hour. Fixed production overheads of €144,360 were incurred during September. The company also incurred fixed marketing and administration costs of €32,160.
 
Requirement
(a)    Prepare a detailed variance analysis statement, reconciling the actual operating profit with the budgeted operating profit for September 2008. Present all relevant variances in as much detail as possible.
 
(b)   Prepare a commentary on the variance analysis for presentation to management in which you highlight key areas for concern.
 
(c) What if the question was slightly different and the €443,400 costs incurred in September related to the production of 6,200 units of which only 5,400 were sold?
Prepare a detailed variance analysis statement if those circumstances applied.
Question 2
Background
Management of Freedom Ltd, a small manufacturing company who produce a single product, are currently reviewing their management accounting systems. They wish to explore alternatives to the costing approach adopted in their monthly management accounts and are also concerned about the usefulness of budgets for the organisation. There is little competition in the sector in which Freedom Ltd operate
Current Costing System
The company currently uses an absorption costing system and reports actual costs for all line items each month. The budgeted volume of 168,000 units is used as the denominator activity level for calculating the overhead absorption rate currently employed by the company. It is also used in determining the fixed overhead per unit included in the standard costing information presented below
€ per unit             € per unit            
Selling price                                                                                        150
Production costs:
Variable                                                               48
Fixed                                                                     36
84
Standard profit per unit                                                                66
Various Costing Approaches
To assist management with their review the company accountant has prepared management accounts for October 2012 using three different approaches; standard absorption costing, standard variable costing and the absorption costing system currently employed whereby accounts are based on actual costs incurred.
A sales volume of 10,000 units was achieved during the month of October. 20,000 units of finished goods were in stock at the start of October and a further 8,000 units were produced during this month. The income statements prepared by the accountant under each of the three approaches are presented below:
Income statements for the month ending 31 October 2012

Actual 
Costs
 
Standard 
AbsorptionCosting
 
Standard
Variable Costing

Sales

1,500,000

1,500,000

1,500,000

Cost of sales

Opening stock
1,680,000

1,680,000

960,000

Production:

Variable
360,000

384,000

384,000

Fixed
*396,000

288,000

______

2,436,000

2,352,000

1,344,000

Closing stock
1,566,000

1,512,000

864,000

870,000

840,000

480,000

Gross profit/contribution

630,000

660,000

1,020,000

Fixed S&D

60,000

64,000

64,000

Production costs

  504,000

Production Variances:

Variableexpenditure

(24,000)

(24,000)

Fixed volume

216,000

Fixed expenditure

(108,000)

(108,000)

Fixed S&D expend

(4,000)
80,000

   (4,000)
(136,000)

Net profit

570,000

516,000

588,000

* These fixed production costs include any under or over absorption of overheads
 
Requirement
 
(a)    Reconcile the standard variable costing profit with the standard absorption costing profit providing a clear explanation for any reconciling item(s) identified.

(b)   Reconcile the standard absorption costing profit with the profit based on actual cost providing a clear explanation for any reconciling item(s) identified.
(c)    Prepare a calculation which demonstrates how the fixed overhead volume variance of €216000 reported under Standard Absorption Costing has been arrived at.
 
(d)   In the context of preparing monthly management accounts discuss the merits of using
(i)                  absorption costing;
(ii)                variable costing
 
(e)   Discuss whether or not, given its particular circumstances, Freedom Ltd would be likely to benefit from the introduction of an Activity Based Costing system.
 
 
Order Now
https://thecustomwritings.com/order/
YOU CAN ALSO PLACE OTHER SIMILAR ORDERS ON OUR WEBSITE AND GET AMAZING DISCOUNTS!!!

Our Service Charter

  1. Excellent Quality / 100% Plagiarism-Free

    We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
  2. Free Revisions

    We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
  3. Confidentiality / 100% No Disclosure

    We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
  4. Money Back Guarantee

    If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.
  5. 24/7 Customer Support

    We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

Instant Quote

Subject:
Type:
Pages/Words:
Single spaced
approx 275 words per page
Urgency (Less urgent, less costly):
Level:
Currency:
Total Cost: NaN

Get 10% Off on your 1st order!