Material Input required

Total Units
Loss
Preloss units

150,000
4%
156,250

Input per unit

Total Input required

0.50
78,125

Internal Available
Mkt stopage

25,000
53,125

Total Relevant cost

Cost per unit

Setup cost
200
80,000
225
17,033,125

Labour
Total Hours required
Loss units

225,000
5,625

(6250*1.5*0.6)

Total Hoours required

Labour rate

Idle hours
Other

230,625
9000/200

Available hours
Rate
20,000
210,625

45
Cost
18
45

Total Relevant cost

360,000
9,478,125
9,838,125

VOH
Toatl hours
Rate
Total Cost

230,625
25
5,765,625

FOH
Cost of 100% capacity
Cost of 10% capacity
Inflation

22,000,000
2,200,000
1,100,000

Total relevant cost

3,300,000

Summary
Material

17,033,125

Labour
VOH
FOH

9,838,125
5,765,625
3,300,000

Total Rel Cost

Profit

35,936,875
(20% of SP)

8,984,219

Sales value

44,921,094

Sale price per unit

299.47

Qtr 1

Qtr 2
580
850
(340)
(170)
(102)
(25)

SP
Material
Labour
VOH
Sellig OH

Qtr 3
540
860
(340)
(170)
(102)
(25)

CM per unit

845
(340)
(170)
(102)
(25)
208

Fixed Costs
FOH
SOH
AOH
a)

(25,500)
(12,000)
(23,500)

Target for qtr 3

Fixed Costs old
Target for Q3
Shortfall of Q2

61,000
62,540
3,120

Total coverage to be done

CM per unit
number of units

126,660
208
608,942

(addiotnal fixed cost is not required since the volume is less than 625,000)

b)

Minimum selling price

Fixed Costs old

61,000

Target for Q3
Shortfall of Q2
Additional FC
Target to be achived
Units to cover
CM per unit
variable cost
Minimum selling price

62,540
3,120
2,500
129,160
650,000
199
637
835.71

FOH
Change in Cost
Change in level
Variable Cost per unit
FOH

4,080
40
102

(84660-102*580)

25,500

Selling Oh
Change in Cost
Change in level
Variable Cost per unit
FOH

1,000
40
25

(26500-25*580)

12,000

Total footballs required

Hours per unit
Total hours required
Avaiable hours

40,000
2
60,000
(200*250)

Shortfall

10,000

Total Cost
Labour

VOH

Option 1

50,000

Current system
Normal
Over time

Option 1

2,100,000
735,000

3,600,000
-

4,500,000

3,750,000

7,335,000

7,350,000

Option 2

Current Efficiency
Expected Efficiency

65%
78%

Hours input
Effective hours

60,000
39,000

Hours required new

50,000

sales

180000* 12*110

Material A
Material B
Labour
VOH
(225000*15)
FOH
Depriciation of new machine
Net Profit

237,600,000

237,600,000

(91,125,000)
(20,250,000)
(64,800,000)
(40,500,000)
(10,000,000)

(86,400,000)
(18,000,000)
(54,108,000)
(28,800,000)
(8,500,000)
(1,500,000)

10,925,000

40,292,000

Old system

New System

Input required
Output
Yield

2,160,000
80%

2,160,000
90%

Input

2,700,000

2,400,000

Material A 75%
Material B 25%

2,025,000
675,000

1,800,000
600,000

2,160,000
0.33

2,160,000
0.23

720,000
200

504,000
200

3,600
18,000

2,520
18,000

Labour
Units
hours per unit
Total Hours req
Per man hour
Men req
Monthly cost

Total Cost

64,800,000

45,360,000

Saavnig

19,440,000

45% of saving as bonus

8,748,000

Labour cost

a)

54,108,000

Absorption rate
A
Budgeted Oh
Basis
Values
Rates

B
5,000
Mach Hrs
400,000
12.50

C
9,000
Lab Hrs
500,000
18.00

5,500
Prime Cost
110,000,000
5.0%

Labour cost of B
Per hour
Hours
Total Cost
Oh 15%

120
500,000
60,000,000
9,000,000

Prime cost of C
Material
Lanour

80,000,000
30,000,000
110,000,000

OH 5%
b)

5,500,000

Actual Cost
A
Material
Labour
OH
Total Actual Cost
Units
Cost per unit

c)

80,000,000
26,400,000
5,350,000

150,000,000
63,600,000
8,900,000

120,000,000
28,800,000
7,450,000

111,750,000
3,570,000

222,500,000
3,570,000

156,250,000
3,570,000

31.30

62.32

43.77

4,250,000

9,540,000

7,440,000

Over under applied

Applied OH

Actual OH

(5,350,000)

(under) / over applied

(1,100,000)

(8,900,000)
640,000

(7,450,000)
(10,000)

Factory Ledger
Material X
Material Y

2,500,000
5,250,000
General Ledger

WIP A
WIP B
WIP C

7,750,000
1,000,000
2,625,000
1,125,000

Matreial X
Matrerial Y

WIP A
WIP B
WIP C
FOH General

1,250,000
3,500,000

450,000
540,000
975,000
35,000
Payroll

Payroll

2,000,000

2,000,000
General Journal

2,000,000

No entry

WIP A
WIP B
WIP C

150,000
225,000
375,000
FOH Applied

FOH Actual

750,000

700,000
General Ledger

700,000

FOH Applied

750,000
FOH Actual
General Journal

FG A
FG B

735,000
15,000

1,600,000
3,390,000
WIP A
WIP B

General Journal

1,600,000
3,390,000

1,600,000
FG A

No entry

No entry

1,600,000

5,080,000
11,953,125

General Ledger
Factory Ledger

#######
Creditors

#######

#######
#######
Acrued payrol
Taxes payable

#######
240,000

No Entry

No Entry

Factory Ledger
Selling and Admin

Acrued payrol

#######
Bank

#######

No entry

Factory Ledger

700,000
Bank

300,000

Accumulated Depr

Factory Ledger

400,000

15,000
COGS

15,000

No entry

COGS

#######
Factory Ledger

Trade debtors

Bank
Discount allowed

#######

#######
sales

#######

#######
40,000
Account receivable

#######

SP
Material
Labour
VOH
CM

Penta
Hexa
Octa
2,300.00
1,550.00
2,000.00
(1,666.67) (1,052.63) (1,358.70)
(25.00)
(37.50)
(56.25)
(133.33)
(85.53)
(121.74)
475.00

374.34

463.32

4.00

2.50

3.00

118.75

149.74

154.44

3.00

2.00

1.00

0.90
6.00
6.67
250.00
1,666.67

0.95
4.00
4.21
250.00
1,052.63

0.92
5.00
5.43
250.00
1,358.70

MHRs
CM / MHR
Ranking

Materail Input req

Yield
Weight per unit
Input per unit of O/P
Material Price
Material per unit
Total OH
Total Cost
Total FC
VC

333.33
(200.00)
133.33

Fixed Cost per hour

210.53
(125.00)
85.53

271.74
(150.00)
121.74

50.00

Production Plan
Units

Octa
Hexa
Penta

Fixed Cost
Profit

9,000.00
20,000.00
5,750.00

Hours
consumed
27,000.00
50,000.00
23,000.00

Left over
Hours
73,000.00
23,000.00
-

CM

4,169,836.96
7,486,842.11
2,731,250.00
14,387,929.06
(5,000,000.00)
9,387,929.06

Q4
Actual Production

50,000

Material Consumption Actual

X
Opening
Usgae
usage variance
Clsoing

Y
20,548
(300,000)
(16,438)

Purchases

10,274
(150,000)
(5,000) using Qty Variance
(8,219)

295,890

152,945

Actual Price
X

Standard Price
Actual Qty
Variance

50
295,890
(95,000)

Actual Price

(50.321)

Actuatl Cost

14,889,521

Labour
Rate Variance
Skilled

Unskilled
150
100
165
105
72,000
96,000

Sp
AP
Aq
Variance

(1,080,000)

(480,000)

Effeciency Variance

Sq
Aq
Sp

Skilled
Unskilled
75,000
100,000
72,000
96,000
150
100

Variance
VOH
Actual VOH

450,000

400,000

30
152,945
275,301 for confirmation
28 from information
4,313,055

Total
Fixed
VOH

16,680,000
(4,240,000) 4000000*1.06
12,440,000

Rate Variance
Skilled
Sp
AQ
SP * AQ
AQ * AP
Variance

100
72,000
7,200,000

Unskilled
80
96,000
7,680,000

14,880,000
12,440,000
2,440,000

Effeciency Variance

Sq
Aq
Sp

Skilled
Unskilled
75,000
100,000
72,000
96,000
100
80

Variance

300,000

320,000

FOH
Expenditure Variance
Budgeted Cost
Actual Cost

4,000,000
(4,240,000)

Adverse vaiance

(240,000)

Volume
Nil
Total
Applied
Actual

4,000,000
(4,240,000)
(240,000)

620,000