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problem 1: Sun Ltd has budgeted to produce 5000 units of Beam per month. On this basis the standard cost per Beam is set as shown:

Direct Materials        50 kilos at Rs 0.18 per kilo 
Direct Labor            45 minutes at Rs 1.60 per hour 
Fixed Overheads      Rs 0.80 per unit

For the month of May the actual production was 4800 Beams and the actual costs incurred for the month were:

Direct Materials                      241 000 kilos at a total cost of Rs 43 300 
Direct Labor                          3400 hours at a cost of Rs 5 500 
Fixed Overheads incurred        Rs 4 140

Mr. Ray, the Management Accountant, has asked you to compute the Material, Labor and Fixed Overheads variances for the month, in brief giving two reasons for each variance.

problem 2: The launch of a new product is being considered and four possible output levels are being considered depending on consumer reaction. The variable costs related with such levels are shown below:

Consumer reaction              Adverse   Average     Good    Excellent
Variable costs (Rs 000`s)        20           30           45          70

There are fixed costs of Rs 36,000 and the C/S ratio is expected to be 60%.


a) Compute the profit and loss at each of the four levels.

b) Compute the break even in sales value.

c) Compute the level of sales at which a profit of Rs 10,000 would be made.

Managerial Accounting, Accounting

  • Category:- Managerial Accounting
  • Reference No.:- M96558

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