Question

N is one of the products made by VIN Company Ltd. The standard marginal cost of product N is given below;

Direct labour 6hrs @k12/hr                    K72

Direct Material 16kgs@K6/kg                 K96

                                                            K168

VIN Ltd has reported the following Variances for the period under review; Direct material price   K18, 840(F), Direct material usage K480 (A), Direct labour rate   K10, 598 (A), Direct labour efficiency K8,478 (F).Actual direct wages cost K171,320 and VIN Ltd paid K5.50 per kg of direct material. There was no opening or closing inventories of the material.

REQUIRED

a.     Calculate the following

i.              Actual output

ii.             Actual hours worked

iii.            Average Actual wage rate per hour

iv.            Actual number of kgs purchased and used.

v.             Explain the interrelationship of Variances      [2 marks each]

b. Standards, Budgets and Plans are very important concepts in cost accounting. Discuss each of them briefly and state if standards are a cast in concrete concept giving reasons for your answer. (15 Marks)