Purchase Solution

Operating system using standard absorption cost: Anderson Ltd.

Not what you're looking for?

Ask Custom Question

Anderson Ltd. manufactures gearboxes for use in cars. At the start of the year, the management of Anderson Ltd. estimated that its costs would be:
Direct labor 8% sales value
Direct material 50% sales value
Variable production overhead 8% sales value
Fixed production overhead 12% sales value
Administration overhead 5% sales value

This was based on the following:
80 employees
2000 hours worked by each employee
40 000 gearboxes manufactured in the year as budgeted production
£200 unit selling price.

You have recently been employed by the company to establish a standard costing system. At the end of the year you were able to extract the following information:
- Labor costs £4.40/hour
- 32 000 units sold
- £210/unit selling price
- 160 000 hours were worked
- Variable production overheads were £640 000
- fixed production overheads were £810 000
- Administration costs were £350 000
- Raw material prices were 10% higher than expected
- Total expenditure on raw material was £3.696 M
- There were no opening or closing stocks of raw materials.

QUESTION- You are required to prepare an operating statement for the year, using a standard absorption costing system.

Direct Labor=
Direct Materials=
Variable overhead=
Fixed overhead=
Admin. overhead=
Total=

Selling price=
Standard profit (per unit) =
Budgeted profit=
Sales price variance=
Sales quantity variance=

Cost Variances
Labor Variances
Standard hours =
Standard cost/hour =
Rate variance =
Standard time =
Actual time =
Time variance =
Efficiency variance =

Material Variances
Material price =
Material usage standard =
actual =
Material usage variance =

Variable overheads
Standard cost £/hour =
Expenditure variance =
Standard cost =
Actual cost =
Efficiency variance (time Ã? cost) =

Fixed overheads
Expenditure variance =
Volume variance =

Admin overhead (treat as fixed)
Expenditure variance =
Volume variance =

Purchase this Solution

Solution Summary

The expert examines operating systems using standard absorption costs for Anderson Ltd.

Purchase this Solution


Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.