Finance
tg1234
Untitleddocument-8.docxTask 5
NOTE: The learner is expected to use an appropriate presentation format and produce a handout taking into account the end users.
The retail group has introduced a new product and uses a standard cost system. Standard costs for 1 000 kilograms of the new product are:
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Requirements |
Quantity (Kilograms) |
Price per kilogram (£) |
Total Cost (£) |
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A |
1 600 |
0.50 |
800 |
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B |
400 |
0.80 |
320 |
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C |
400 |
0.20 |
80 |
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Input |
2 400 |
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600 |
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Output |
2 000 |
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400 |
The production of 1 000 kilograms of the new product requires 1 200 kilograms of raw materials. Hence the yield is 1 000 / 1 200 or 5/6 of input. Materials records indicate.
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Materials |
Opening Inventory |
Purchases (units) in April |
Closing Inventory |
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A |
20 000 kilograms |
324 000 @ £0.48 |
30 000 kilograms |
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B |
24 000 kilograms |
60 000 @ £0.84 |
8 000 kilograms |
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C |
30 000 kilograms |
64 000 @ £0.22 |
22 000 kilograms |
To convert 1 200 kilograms of raw materials into 1 000 kilograms of finished product required 25 hours of labour at £8.25 per hour. Actual direct labour hours and costs are 3,800 hours at £31,350. Factory overhead is applied on a direct labour hour basis at a rate of £9 per hour (£5 fixed, £4 variable).
Factory overhead is £36,000 with 4,000 direct labour hours. Actual overheads are £38,000, Actual finished production is 200,000 new products.
The standard cost per kilogram of the finished product:
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Materials |
£0.60 per kilogram |
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Labour |
£0.24 per kilogram |
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Factory overheads |
£0.20 per kilogram |
The standard selling price per unit 25% mark up on total cost. The actual selling prices 20% mark up on total cost.
5.1 Perform the activities listed below. When requested make calculations providing a detailed explanation of the steps followed, justification and interpretation of the results.
A) Calculate the total and unit costs of the finished product.
B) Produce an absorption costing statement showing the marginal cost.
E) Evaluate the use of different costing methods for pricing purposes
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Activity 5.1 |
AC3.2: Evaluate the use of different costing methods for pricing purposes |
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Please write your answer here (keep the original formatting)…….
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TO BE FILLED IN BY THE STUDENT: |
Word Count: ___________ |
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TO BE FILLED IN BY THE ASSESSOR: Explain why the Assessment Criteria are achieved or not NOTE: To earn the full score a student should cover all the following: Costing and pricing · Classifying costs – direct/indirect, fixed/variable · Calculating unit cost · Dealing with overheads – full absorption costing and overview of other costing methods · Pricing – cost plus, marginal cost, price takers etc. · Break-even analysis · Marginal costing |
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Assessment Criteria Achieved |
Yes/No |
Please add comments here
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Score (0 to 100)
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* NOTE FOR PROFESSOR : Assessment criterion is achieved, “YES”, ONLY if the student’s answer is 100% correct according to ATHE requirements (all indicative content is covered, command verb is addressed correctly, the answer demonstrates understanding and depth, the task is done the way it is asked, references are properly used). Professor should address in the comments box what a student is missing to get the full score. Please, apply the same logic for assessing other tasks. |
5.2 Perform the activities listed below. When requested make calculations providing a detailed explanation of the steps followed, justification and interpretation of the results.
A) Calculate the materials, labour and overhead variances.
B) Interpret the variance results considering both financial and non-financial factors.
NOTE: There should be a detailed explanation of the budgetary control process. The evaluations should be supported by illustrations. The learner is not expected to produce a detailed budget statement. The learner needs to use budgeted and actual figures to calculate and interpret variances. The learner should provide clear workings for their calculations.
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Activity 5.2 |
AC3.1: Use budget and actual figures to calculate and interpret variances |
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Please write your answer here (keep the original formatting)…….
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TO BE FILLED IN BY THE STUDENT: |
Word Count: ___________ |
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TO BE FILLED IN BY THE ASSESSOR: Explain why the Assessment Criteria are achieved or not NOTE: To earn the score a student should cover all the following: Budgetary control · Purpose and content of budgets · Cash flow forecasts · Budgetary control process · Importance of budgets for management · Zero based budgeting, incremental budgeting · Advantages and disadvantages of budgets · Variances · Flexing the budget · Calculating variances · Explaining variances – financial and non-financial factors · Reconciliation of budgeted to actual profit · Advantages and disadvantages of variance analysis |
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Assessment Criteria Achieved |
Yes/No |
Please add comments here
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Score (0 to 100) |
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BIBLIOGRAPHY:
Please use APA style for citation. Please keep initial formatting
APPENDICES (Please, remove this part if no appendices are added):
