TUTORIAL QUESTIONS
LABOUR COSTING
QUESTION ONE
A Company's basic wage rate is K0.45 per hour, and its overtime rates are:
1
Evenings – 13
Weekends - double time
During the previous year, the following hours were worked:
Normal Time 440,000 clock hours
Time plus 1/3 40,000 clock hours
Double Time 20,000 clock hours
The following times have been worked on the stated jobs.
Job X Job Y Job Z
Clock Hours Clock Hours Clock Hours
Normal Time 6,000 10,000 8,000
Evening Overtime 600 1200 2100
Weekend Overtime 200 100 600
You are required to calculate the labour cost chargeable to each job in each of the following
circumstances:
(a) Where overtime is worked regularly throughout the year as company policy due to a labour
shortage.
(b) Where Overtime is worked specifically at the customer's request to expedite delivery.
QUESTION TWO
CVP ANALYSIS
QUESTION ONE
Sotiri Limited manufactures a single product with a sale price of k400,000 per unit.
The marginal cost is as follows:
k
Direct materials 20kg @ k2,500 per kg 50,000
Direct labour 2 hours @ k37, 500 per hour 75,000
Variable overheads 1 hour @ k25,000 per hour 25,000
150,000
Fixed costs are k30,000,000 per annum.
You are required to:
a. Calculate
i. The number of units to sell in order to breakeven
ii. Sales at breakeven point
iii. C/S ratio
iv. Number of units to be sold to achieve a profit of k40, 000,000.
v. The number of units to be sold to achieve a profit after tax of k21,000,000 if the tax
rate is 30% (10½ Marks)
b. List FOUR uses of cost volume profit analysis (2 Marks)
(Total 12½ Marks)
QUESTION TWO
a.) Obojoh Enterprises furnishes you with the following information relating to half
year ending 30th June 2019.
Fixed Expenses - K750,000
Sales - K2,000,000
Profit - K500,000
During the second half of the same year, the firm has projected a loss of
K100,000.
You are required to calculate:
i. Contribution margin ratio and breakeven point
ii. Margin of safety for the period ending 30th June 2019
iii. Expected sales volume for second half of the year if selling price and fixed
expenses remain unchanged in the second half of the year
iv. The breakeven point and margin of safety for the year ended 31st
December 2019.
b. State FIVE uses of breakeven analysis
MARGINAL AND ABSORPTION COSTING
QUESTION ONE
TMN Limited commenced business on 1st March 2020 making one product only.
The standard cost of which is as follows
K
Direct Material 8
Direct Labour 5
Variable Production Overhead 2
Fixed Production Overhead 5
Standard Production Cost 20
The fixed production overhead figure has been calculated based on a budgeted
normal output of 36,000 units per annum.
Selling, distribution and administration expenses are:
Fixed cost K12,000
Variable cost 15% of sales
value
Selling price per unit K35
Number of units produces (month of March) 2,000
Number of units sold ( month of March) 1,500
Required:
a. Prepare an Operating Statement for the month of March 2020 using
i. Marginal Costing Technique (4 Marks)
ii. Absorption Costing Technique (4 Marks)
b. Present a reconciliation of the profit and loss given in (ai) and (aii) above.