Question #304821
: a) Outline the various ways of dealing with uncertainity in cost volume profit analysis (4mks)
b) Vast company limited manufactures a single product Zoe.
The following standard cost apply in its business
Standard weight to produce one unit 12kgs
Standard price per kg sh 9
Standard hours to produce one unit 10
Standard rate per hour sh 4
Actual production and costs for one accounting period were as follows:
Material used 3770kgs
Material costs sh 35,815
Hours actually worked 2,755
Hours paid for 2,900
Wages paid sh 11,571
The actual output was 290 units
Required:
Calculate the relevant material and labour variances (6mks)
Expert's answer
a) In order to determine the costs and profits in conditions of uncertainty, it is first necessary to determine the "critical points" by methods:
(Boston Consulting Group Matrix, McKinsey Matrix, Shell/DPM Matrix); SWOT analysis method; method of compiling a profile of the environment; logistic analysis.
Taking into account the above methods, try to predict the costs and profits of the enterprise.
b)
deviations amounted to materials
