Assignment # 3

Course: Course Code: Resource Person: 1. 2. 3. 4. Performance Management MC-321 Tahir Mahmood FCCA, FCA Program: Marks: Semester: M.Com 10 Spring 2012

Do not copy from anywhere. Write in your own words. Answers of theoretical questions should be precise, to the point, and in bullet form. Cleanliness carries marks.

Question # 1:
Prepare the flexible budget at 80% and 100% of normal capacity, showing itemized manufacturing cost, total manufacturing cost, and total manufacturing cost per unit from the information given below: No. of production workers employed Working hours per day Working days in a month Direct labor rate Direct material Fixed FOH Indirect materials Indirect labor Other FOH The normal capacity level of the company is 3,000 units. 15 12 25 Rs. 15.00 per hour 3 Kg @ Rs. 5.00 per Kg Rs. 3,000 0.30 per direct labor hour 0.25 per direct labor rupee 0.40 per direct labor hour (4 Marks)

Question # 2:
A company produces and sells one product only, the standard cost for one unit being as follows; Direct material A - 15 kilograms @ Rs.10 per kg Direct material B - 8 liters @ Rs.6 per litter Direct wages - 6 hours at Rs.7 per hour Fixed production overhead Total standard cost Rs. 150 48 42 60 300

The fixed overhead included in the standard cost is based on an expected monthly output of 1,200 units. Fixed production overhead is absorbed on the basis of direct labor hours. During April the actual results were as follows: Production Direct wages Fixed production overhead Required: i) ii) Fixed production overhead volume variance Fixed overhead volume efficiency variance Fixed overhead volume capacity variance 1000 units 5,800 hours worked for Rs. 80,000 Rs. 74,000

iii)

(6 Marks)