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5 marksStandard Costing and Variance Analysis

CAPE Accounting Unit 2 · 2002 · Paper 2 · Question 3(b)(i)

Westend Laboratory manufactures chemical product Westext. Standard costs per unit and actual October operating figures are provided.

Calculate the price and efficiency variances for materials used in the production of Westext.

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Other parts of this question

  1. 3(a)(i)Calculate the company's contribution margin ratio.[1 mark]
  2. 3(a)(ii)Compute the quarterly break-even point in units sold and in sales dollars.[3 marks]
  3. 3(a)(iii)How many units would have to be sold each quarter to earn a target profit of $90,000?[2 marks]
  4. 3(a)(iv)Using the sales level arrived at (iii) prepare a contribution income statement.[3 marks]
  5. 3(a)(v)Compute the company's margin of safety in both dollar and percentage terms.[2 marks]
  6. 3(a)(vi)If existing sales increase by $50,000 per quarter and there is NO change in fixed expenses, by how much would you expect quarterly net income to increase?[1 mark]
  7. 3(a)(vii)Management considers using a faster machine which increases variable expenses by…[6 marks]
  8. 3(a)(viii)Using the information contained in the requirement above calculate the new break-even point in units.[2 marks]
  9. 3(b)(ii)Calculate the rate and efficiency variances for direct labour employed in the production of Westext.[5 marks]
  10. 3(b)(iii)Calculate the variable overhead spending and efficiency variance.[5 marks]

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