Conceptual Assignment no 1–(20 Marks)

Q. 1. SV LTD produces two products X & Y.Both are produced on the same equipment and use
similarprocesses.The products differ by volume.Product X is a high -volume product, while Y is a
lowvolume product.Following details are available (10 m)

Products Machine hours per Annual output No. of purchase No. of set ups
unit orders
X 2 1000 80 40
Y 2 10000 160 60

The Cost Centre costs are Rs.4,40,000,but have been further analysed as follows

Volume related 1,10,000

Purchasing related 1,20,000
Set‐up related 2,10,000
4,40,000

You are required to answer the following:

A) Considering traditional volume-based costing system(machine hrs) is in use
1. Overhead rate per machine hour
2. Overhead per unit of X & Y
3. Total costs of 1000 units of product X and 10000 units of product Y.
B) Considering ABC System is followed:
1.Cost per unit of X & Y

C) Offer your comments

Q. 2. Sweetwater Company manufactures two products, Mountain Mist. The company prepares its master
budget on the basis of standard costs. The following data are for March: (10 m)

Standards Mountain Mist Valley stream

Direct Material 3 ounces at Rs. 15 per ounce 4 ounces at Rs. 16.50 per ounce
Direct Labor 5 hours at Rs. 60 per hour 6 hours at Rs. 75 per hour
Variable Overhead (per direct labor Rs. 48 Rs. 52.50
hour)

Actual Mountain Mist Valley stream

Direct Material 3100 ounces at Rs. 13.50 per 4700 ounces at Rs. 17.25 per
ounce hour
Direct Labor 4900 hours at Rs. 60.75 per 7400 hours at Rs. 76.50 per
hour hour
Variable Overhead (per direct labor
hour) 242,550 378,510
Units produced (Actual) 1000 units 1000 units

Indicate whether the variances are favorable (F) or unfavorable (U) to the performance of the plant.
Required:
a. Calculate the direct materials price variance.
b. Calculate the direct materials usage variance.
c. Calculate the direct labor rate variance.
d. Calculate the direct labor efficiency variance.
e. Calculate the variable overhead spending variance.
f. Calculate the variable overhead efficiency variance.