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08 November 2008, 14:34   Report Abuse


humble devotee of saraswati

[ Scorecard : 274]

  1. suppose that 4 kgs of material A are required to make one unit of product TS, each kilogram costing Rs.10. It takes direct labour 5 hours to make one unit of product TS. The labour force is paid Rs.4.50 per hour.
During the period the following results were recorded.
Material A: 8,200 kgs purchased on credit*                        Rs.95000
Material A: kgs issued to production*                                 8200 kgs
Units of product TS produced*                                           1600
Direct labour hours worked*                                              10000
Cost of direct labour*                                                         Rs.32000
(a)    Calculate the following variances for the period.
·        Material price variance
·        Material usage variance
·        Labour rate variance
·        Labour efficiency variance
(b)   Prepare journal entries for the transactions marked * above, together with the          variances calculated in (a).
You should make the following assumptions
·        An integrated accounting system is maintained
·        There are no opening or closing stocks of work in progress.

Please mail the solution to psrinivas1 @

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