Problem – 10 (Profit Variance)(Factors contributing to change in

profit)

During 2012-13, average prices increased over these of the previous year: i. 20% in case of sales: ii.15% in case of prime cost; and iii.10% in case of overheads.Prepare a profit variance statement from the above data.

Items 31.03.2012 (` in lakhs)

30.03.2013 (` in lakhs)

Sales 120 129.6Prime cost of sales

80 91.1

Variable Overheads

20 24

Fixed Expenses 15 18.5Profits 5 4

Problem – 11 (Working back)

NAVAYOGANA LTD., has adopted a Standard Costing System. The Standard output for a period is 20,000 units. The Standard Cost and profit per unit is given below:

Particulars `Direct Materials (6 units @ ` 1.50) 9.00Direct Labour (6 units @ ` 1.00) 6.00Direct Expenses 1.00Factory Overheads: Variable 0.50Fixed 0.60Administrative Overheads 0.60

17.70

Profit per unit 2.30Selling Price (Fixed by Government) 20.0

0

Contd…• Actual production and sales for a period was 14,400 units. • The following are the variances worked out at the end of the

period: Favourable (`)

Adverse (`)

Direct Materials: Price Variance --- 8,500Usage Variance 2,100 ---Direct Labour: Rate Variance --- 8,000Efficiency Variance 6,400 ---Factory Overheads: Variable Expenditure Variance 800 ---Fixed Expenditure Variance 800 ---Fixed Volume Variance --- 3,360Administrative Overheads: Expenditure Variance --- 800Volume Variance --- 3,360

Contd…

You are required to:

(i) Ascertain the details of cost and prepare the Profit and Loss Account in the statement for the period, showing actual profit.

(ii) Reconcile the actual profit with the standard profit.