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Total Product Cost and Variance Analysis

The total product cost per unit is Tk. 386, with variable costs at Tk. 238 and fixed costs at Tk. 178. Variance analysis shows unfavorable material and labor variances, while variable MOH variance is favorable. The breakeven point is approximately 1464 units, with a total quarterly sales revenue of Tk. 5,220,000.

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Arnob Wahed
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7 views2 pages

Total Product Cost and Variance Analysis

The total product cost per unit is Tk. 386, with variable costs at Tk. 238 and fixed costs at Tk. 178. Variance analysis shows unfavorable material and labor variances, while variable MOH variance is favorable. The breakeven point is approximately 1464 units, with a total quarterly sales revenue of Tk. 5,220,000.

Uploaded by

Arnob Wahed
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Total Product Cost (Variable + Fixed) per Unit = Tk.

386
Variable Cost per Unit = Tk. 238
Fixed Cost per Unit = Tk.178

Fixed Costs (monthly):

Labor: Tk. 2,50,000

MOH (Rent + Electricity): Tk. 2,80,000


Total Fixed Costs per month = (250000+ 280000) = 530000

Variance Analysis

Material Variance

Material Price Variance = (Actual Price-Standard Price) x Actual Quantity Used


= (208-200)x3000
= 24,000 (Unfavorable)

Material Usage Variance = Standard Price x (Actual Quantity Used-Standard Quantity


Allowed )
= 200x(3000-3100)
= -20,000 (Favorable)

Total Material Variance = 4,000 (Unfavorable)

Labor Variance

Labor Rate Variance = (Actual Rate-Standard Rate) x Actual Hours


= (84-80) x 234
= 936 (Unfavorable)

Labor Efficiency Variance = (Actual Hours -Standard Hours ) x Standard Rate


= (234-220)x80
= 1,120 (Unfavorable)

Total Labor Variance = 2056 (Unfavorable)

Variable MOH Variance


Variable Overhead Rate Variance = (Actual Rate-Standard Hours ) x Actual Hours
= (30-35)x234
= -1170 (Favorable)

Variable Overhead Efficiency Variance = (Actual Hours -Standard Hours ) x Standard


Rate
= 0 ; there is no labor which would result in
efficiency as salary is based on monthly basis
Total Variable MOH Variance = -1170 (Favorable)

Profit Margin
Profit Margin= (Selling Price−Total Product Cost) / Selling price
= (600-416)/600 = 30.66%

Contribution Margin
Contribution Margin = Selling price – Variable Cost = (600-238) = 362 Tk

Breakeven Point in Units:

BEP (Units)= Fixed Cost÷ CM Per Unit= 530000/ (600 - 238) = 1464.088 units

Breakeven Revenue:
Breakeven Revenue = BE Rev x Selling Price = 1465x600 = Tk. 879,000

MASTER BUDGET
Sales Budget
Months Budgeted Sales Selling price Sales Revenue
(Units)
Month 1 3000 600 1800000
Month 2 3100 600 1860000
Month 3 2600 600 1560000
Total Quarterly Sales Revenue = Tk.5,220,000

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