Lucas runs a small firm that makes dining room tables. The tables are largely handmade and in a year the following costs are expected to be incurred in the production of 500 tables: £ Direct materials 50,000 Direct labour 30,000 Factory overheads: Fixed 6,000 Factory overheads: Variable 4,000 Selling and distribution costs 8,000 Administration costs 8,000 Total 106,000 Each table is sold for £300. All […]

Alec Powell runs a small firm that produces ornate wine racks for customers. These are high-quality products and Powell has gradually built up a reputation for high-quality output. Each wine rack sells for £50. A Spanish buyer, Ramadal, wants to import the wine racks for sale in her domestic market. She believes that market conditions would dictate a lower selling price and has offered to […]

Fowler Ltd manufactures a range of products. One type of product is interactive whiteboards for schools and colleges. Data relating to the costs for October 2014 are as follows: £ Direct materials 30,000 Direct labour 15,000 Manufacturing overheads: Fixed 5,000 Variable 7,000 Selling and distribution costs Fixed 15,000 Variable 2,000 The fixed costs are factory specific and are not specially related to the output of […]

Hinds Ltd, as part of its product range, produces the ‘SILVTO’. This product normally sells for £160. The following costs are associated with its production: Cost per unit £ Direct materials 34 Direct labour 75 Variable overheads 12 Fixed costs 25 The directors have recently received a request from a Latvian company offering to purchase 2,000 SILVTOs at a price of £140 each. Advise them […]

Hawkins Ltd manufactures three types of wheelbarrow. These wheelbarrows are designated as A1, A2 and A3. All three types of wheelbarrow use the same grade of skilled labour and the wage rate of this labour is currently £6.50 per hour. The following is a unit cost statement for each type: Al A2 A3 £ £ £ Direct materials 5 6 8 Direct labour 9 12 […]

In producing one unit of product A21, the following standard cost for materials has been set: 20 metres × £7.00 per metre = £140.00 However, recent production data show that the firm is using 24 metres @ £5.50 per metre in the production of one unit: Total materials variance = Actual materials cost – Standard materials cost Actual materials cost Standard materials cost Materials cost […]

The Norton Boys’ Tennis Club is a small, local club. The club is run for young people aged between 11 and 18. Although the club has been successful in the regional junior leagues, it is facing financial problems. The rent charged on the clubhouse and on the ground is set to rise by 20 per cent next year and it is felt that increasing subscription […]

Data relating to standard labour cost of one unit of product BZ5 is as follows: 800 hours @ £5.00 per hour = £4,000 The management have observed that the actual labour costs incurred in the production of one BZ5 are 750 hours at a wage rate of £6.00 per hour. Total labour variance = Actual labour cost – Standard labour cost Actual labour cost Standard […]

From the following data construct a manufacturing account for the year ended 31 December 2015. £ Purchases of raw materials 89,500 Opening inventory: Raw materials 12,450 Work-in-progress 43,100 Carriage inwards 875 Returns outwards 2,190 Labour costs: Factory supervisors 29,000 Manufacturing wages 87500 Depreciation of factory equipment 5,600 Rent 18,000 Additional information: 1Rent is to be apportioned between factory overheads and office expenses in a 3:1 […]

The manager of a business has budgeted to produce 600,000 units of output in 2017. The standard quantities for this budgeted output level are as follows: Materials (metal) 450,000 m2 Materials (fabric) 200,000 m2 Labour 50,000 hours If actual output fell short of budgeted levels and was 40 per cent less than expected, at 360,000 units of output, we should ‘flex’ these standard quantities to […]