Q1

Clear Co is an eye treatment specialist, founded in 20X4, which runs five clinics nationwide. It is based in
Zeeland, a country in which 20% of the population is over 65 years old, compared to 15% ten years ago.
Clear Co offers two eye treatment procedures: laser treatment and lens treatment. Laser treatment is the
less complex of the two procedures. Technology changes rapidly in this industry and as a result 90% of
patients now qualify for laser treatment, compared to only 80% five years ago.
The remaining 10% of patients are only able to have lens treatment, of which there are two types:
‘refractive lens exchange’ (RLE) and ‘implantable contact lenses’ (ICL). Clear Co started providing RLE,
a treatment most effective for patients aged 40 or older, in 20X4 when it was founded. Two years ago, it
also began providing ICL, a treatment recommended for patients under the age of 40.
The market for eye treatment procedures in Zeeland is dominated by a few main suppliers, of which Clear
Co is one. Until two years ago, Clear Co was the largest supplier but, following the merger of two other
companies, it is now the second largest. The merged company, Eos Co, has recently released its financial
statements for the year, showing profits which were 10% higher than forecast. Eos Co's press release
stated that it has achieved this despite offering reduced prices for the ICL treatment. It has been able to
offer reduced prices because of the economies of scale achieved by the merger.
The following information relates to the two types of lens treatments offered by Clear Co for the year just
ended:

Lens treatment RLE ICL

Budget Actual Budget Actual
Number of treatments 3,750 4,130 1,320 960
Selling price per treatment ($) 3,000 2,900 3,650 3,400
Variable cost treatment ($) 600 590 1,150 1,200
Required:
(a) Calculate the following TOTAL variances for Clear Co's lens treatments:
(i) the sales mix contribution variance
(ii) the sales quantity contribution variance.
(b) Explain what each of the sales mix contribution variance and sales quantity
contribution variance measures.
Q3
The School Uniform Company (SU Co) manufactures school uniforms. One of its largest contracts is
with the Girls’ Private School Trust (GPST), which has 35 schools across the country, all with the same
school uniform. After a recent review of the uniform at the GPST schools, the school’s spring/summer
dress has been re-designed to incorporate a dropped waistband. Each new dress now requires 2.2 metres
of material, which is 10% more material than the previous style of dress required.
However, a new material has also been chosen by the GPST which costs only $2.85 per metre which is
5% cheaper than the material used on the previous dresses. In February, the total amount of material used
and purchased at this price was 54,560 metres. The design of the new dresses has meant that a
complicated new sewing technique needed to be used. Consequently, all staff required training before
they could begin production. The manager of the sewing department expected each of the new dresses to
take 10 minutes to make as compared to 8 minutes per dress for the old style. SU Co has 24 staff, each of
whom works 160 hours per month and is paid a wage of $12 per hour. All staff worked all of their
contracted hours in February on production of the GPST dresses and there was no idle time.
No labour rate variance arose in February.
Activity levels for February were as follows:
Budgeted production and sales (units): 30,000
Actual production and sales (units): 24,000
The production manager at SU Co is responsible for all purchasing and production issues
which occur. SU Co uses standard costing and usually, every time a design change takes place, the
standard cost card is updated prior to production commencing.
However, the company accountant responsible for updating the standards has been off sick for the last
two months. Consequently, the standard cost card for the new dress has not yet been updated.
Required:
(a) Calculate the material variances in as much detail as the information allows for the month of February.
(b) Calculate the labour efficiency variances in as much detail as the information allows for the month of
February.
(c) Assess the performance of the production manager for the month of February.

Q4
Glove Co makes high quality, hand-made gloves which it sells for an average of $180 per pair. The
standard cost of labour for each pair is $42 and the standard labour time for each pair is three hours. In the
last quarter, Glove Co had budgeted production of 12,000 pairs, although actual production was 12,600
pairs in order to meet demand. 37,000 hours were used to complete the work and there was no idle time.
The total labour cost for the quarter was $531,930.
At the beginning of the last quarter, the design of the gloves was changed slightly. The new design
required workers to sew the company’s logo on to the back of every glove made and the estimated time to
do this was 15 minutes for each pair. However, no-one told the accountant responsible for updating
standard costs that the standard time per pair of gloves needed to be changed. Similarly, although all
workers were given a 2% pay rise at the beginning of the last quarter, the accountant was not told about
this either. Consequently, the standard was not updated to reflect these changes.
When overtime is required, workers are paid 25% more than their usual hourly rate.
Required:
(a) Calculate the total labour rate and total labour efficiency variances for the last quarter.
(b) Analyze the above total variances into component parts for planning and operational variances in as
much detail as the information allows

Q5. MAY 2019 Q5.

Emefa Ltd bakes cakes by mixing three ingredients namely Flour, Sugar and Butter in the standard
proportions 5:3:2 respectively. However, the production process does not always mix the ingredients in
these proportions, but the cake can be sold if the mixture is within certain limits.
The new production manager (a celebrity chef) has argued that the business should use only organic
ingredients in its cake production. Organic ingredients are more expensive but should produce a product
with an improved flavour and give health benefits for the customers. It was hoped that this would
stimulate demand and enable an immediate price increase for the cakes.
The standard prices for the ingredients are:
Flour - GH¢ 2.50 per kilo
Sugar - GH¢ 3.00 per kilo
Butter - GH¢ 2.00 per kilo
There is 5% normal loss in the production process.
The budget for production and sales in the period was 50,000 cakes.
Actual production and sale of cake mixture was 228,000 kg.
During the period the inputs were as follows:
Kg GH¢
Flour 96,000 249,600
Sugar 72,000 216,000
Butter 50,000 105,000
Required:
Calculate the following variances:
i) Material Mix Variance
ii) Material yield variance
iii) Material usage variance
b) Differentiate between planning variances and operational variances.
 c) Explain why separating variances into their planning and operational components provides better
information for planning and control purposes.

Q6. NOVEMBER 2019 Q3.

a) Explain what is meant by basic standards and ideal standards and their effect on employee motivation.
b) Sasraku Ltd manufactures and sells standard quality fuel pumps. Other companies integrate these
pumps in their production of petrol engines. At present, Sasraku Ltd manufactures only three different
types of fuel pumps-oil pump, gas pump and diesel pump. Simon, the Management Accountant, allocates
fixed overheads to these pumps on an absorption costing system.
The standard selling price, volumes and cost data for these three products for the last period
are as follows:
Oil Pump Gas Pump Diesel Pump
Selling price per unit (GH¢) 91.00 97.50 117.00
Direct material (GH¢) 35.10 26.65 31.52
Direct labour per unit (GH¢6.50 per hour) 3.25 hours 5.20 hours 4.55 hours
Machine hours per unit 1.95 hours 3.90 hours 5.20 hours
Budgeted production and sales (units) 10,000 13,000 9,000
The total fixed production overhead for the last period was estimated in the budget to be GH¢526,500.
This was absorbed on a machine hour basis.
The Board of Directors has decided to calculate the variances for the period in order to analyse the sales
performance of the company.
The following information of actual volumes and selling prices for the three products in the last period
was obtained.
Products Actual selling price per units (GH¢) Actual production and sale (units)
Oil Pumps 94.25 9,500
Gas Pumps 100.75 13,500
Diesel Pumps 123.50 8,500
Required:
i) Calculate standard profit per unit
ii) Calculate the following variances for overall sales for the last period:
• Sales profit margin variance
• Sales mix profit variance
• Sales quantity profit variance
• Sale volume profit margin
iii) Prepare a statement showing the reconciliation of budgeted profit for the period to actual sales less
standard cost.

Q7. MAY 2020, Q3.

Slab Processes (Ghana) Limited manufactures a single product. The product is manufactured in a single
process, by combining three raw materials, A, B and C.
For 2019, the standard cost of a litre of the product was established in the budget as follows:
Material Quantity(litres) Price per litre Standard cost
GH¢ GH¢
A 0.7 2 1.4
B 0.4 4 1.6
C 0.1 8 0.8
1.2 3.8
Loss in process (0.2) -
Standard cost per litre of output 1.0 3.8

During one month in the year, 2,000 litres of finished products was the output from the process, and the
actual direct material costs were as follows:
Material Quantity Cost
litres GH¢
A 1,340 2,970
B 910 3,450
C 240 1,900
8,320
Required:
a) Calculate the material price variance and the material usage variances for the period.
b) Analyse the operational usage variance into a materials mix and a materials yield variance.
Q8. NOVEMBER 2020, Q3b.
Zip Ltd, a premium food manufacturer, is reviewing its operations for a three-month period for 2019. The
company operates a standard marginal costing system and manufactures one product, ZP, for which the
following standard revenue and cost data per unit of product is available:
Selling price GH¢12.00
Direct material A 2.5 kg at GH¢1.70 per kg
Direct material B 1.5 kg at GH¢1.20 per kg
Direct labour 0.45 hours at GH¢6.00 per hour
Fixed production overheads for the three-month period were expected to be GH¢62,500.
Actual data for the three-month period was as follows:
Sales and production 48,000 units of ZP were produced and sold for GH¢580,800
Direct material A 121,951kg were used at a cost of GH¢200,000
Direct material B 67,200 kg were used at a cost of GH¢84,000
Direct labour Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of GH¢117,120
Fixed production overheads GH¢64,000
Budgeted sales for the three-month period were 50,000 units of Product ZP.
Required:
Calculate the following variances.
i) Sales volume contribution and sales price variances
ii) Price, mix and yield variances for each material
iii) Labour rate, labour efficiency and idle time variance
Q9. APRIL 2022, Q3a
Plytimba manufactures high quality wooden chair using odum sourced from sustainable forests. The
company began trading two years ago having identified a niche market for the product.
During the year, Plytimba was forced to purchase wood from a different company as the usual supplier
did not have sufficient stock available. The company operates a standard variable costing system and
details relating to the most recent financial period are shown below.

Budgeted information:
Production in units 134,400
GH¢
Direct materials: 10,080 square metres odum wood 282,240
Direct labour: 33,600 hours 483,840
Variable production overhead (based on direct labour hours) 225,792
Fixed production overhead 29,200
Actual information:
Production in units 135,000
GH¢
Direct materials: 10,800 square metres odum wood 300,240
Direct labour hours: 27,000 hours 486,000
Variable production overhead 194,400
Fixed production overhead 30,150
Required:
i) Prepare Standard Cost Card for one wooden chair.
ii) Calculate SIX (6) variances in as much detail as the information
Q10. AUGUST 2022, Q3a
The data below relates to Odeneho Plc and they are in respect of the production of its product, Milcho, for
the first quarter ended 31 March, 2022.
Budgeted output 5,000 units
Standard hours to produce one unit 2
Budgeted fixed production overhead GH¢25,000
Actual fixed production overhead incurred GH¢25,840
Actual hours worked 10,500
Actual units produced 4,980
Required:
Determine the following:
i) Fixed overhead expenditure variance.
ii) Fixed overhead capacity variance.
iii) Fixed overhead efficiency variance.
iv) Fixed overhead volume variance.
v) Fixed production overhead variance.
Q.11 MARCH 2023 Q3.a

a) Tsekpo produces strong and affordable doors for the Ghanaian market. The company has
been operating for the past five years from its manufacturing base at Tafo.

During the year under consideration, Tsekpo invested in a new information technology
system in order to improve its management accounting information. Unfortunately, there
has been problems with the software since its acquisition. The standard cost card, which
provides details of the standard production cost to make one door, has been lost and the
company is unable to prepare its budget for the year ahead.

The Management Accountant has retrieved some information relating to actual costs and
variances for the year. The budgeted production for the year was 21,000 doors. Other
relevant information is shown below:

Actual Cost GH¢

Direct material costs: 16,200 square meters 81,000
Direct labour costs: 8,640 hours 108,864
Variable production overhead costs 54,000
Fixed production overhead Costs 85,200

Variances
Direct material price variance 4,050 F
Direct material usage variance 5,670 F
Direct labour rate variance 864 F
Direct labour efficiency Variance 27,432 F
Variable production overhead expenditure variance 432 A
Variable production overhead efficiency variance 13,392 F
Fixed production overhead expenditure variance 3,775 A

Additional information:
i) Actual production is 600 doors above budgeted level.
ii) Tsekpo operate a standard variable costing system.
Required:
Using the information provided, prepare the standard cost card for the production of one
door.
Q12. NOV 2023 Q3.a

a) Barka Ltd is a manufacturer of jute bags. The following data was provided by the Cost
Accountant who wants to analyse the various variances for decision making:
Details
Normal capacity 1200 machine hours for 20 days in a month
Budgeted monthly fixed overheads GH¢300,000
Standard time to manufacture a unit of 4 hours
product

Actual data for the month of April 2023

Details
Days and hours worked 900 machine hours for 19 days
Output 4,275 units
Actual fixed overheads incurred GH¢290,0000

Required:
Calculate the following variances:
i) Efficiency
ii) Capacity
iii) Expenditure
iv) Volume
v) Total fixed overhead
 Q13. JULY 2023 Q.2
a) Bekwai manufactures and sells a single product. The company operates a standard marginal
costing system and a just-in-time purchasing and production system. No inventory of raw
materials or finished goods is held.

Details of the budget and actual data for the period are as follows:

Budget data
Standard production cost per unit:
GH¢
Direct material: 8kg @ GH¢10.80 per kg 86.40
Direct labour: 1.25 hours @ GH¢18.00 per hour 22.50
Variable overheads: 1.25 hours @GH¢6.00 per direct labour hour 7.50

Standard selling price: GH¢180 per unit

Budgeted fixed production overheads: GH¢170,000
Budgeted production and sales: 10,000 units

Actual data
Direct material: 74,000 kg @ GH¢11.20 per kg
Direct labour: 10,800 hours @ GH¢19.00 per hour
Variable overheads: GH¢70,000
Actual selling price: GH¢184 per unit
Actual fixed production overheads: GH¢168,000
Actual production and sales: 9,000 units

Required:
Using marginal costing principles, prepare a statement that reconciles the budgeted
contribution and the actual contribution. (Your statement should show the variances in as
much detail as possible).
Q14. NOV 2021. Q3.a

a) GG Ltd is into fuel processing and transportation. GG Ltd produces three types of fuel,
namely: Petrol, Diesel, and Pre-mix fuel.

The standard time for the production of the fuel types are:
Petrol: 50 minutes per metric tonne
Diesel: 30 minutes per metric tonne
Pre-mix fuel: 45 minutes per metric tonne.

The production budget for August is as follows:

Petrol: 42,000 metric tonnes
Diesel: 60,000 metric tonnes
Pre-mix fuel: 45,000 metric tonnes

The actual data for the month were as follows:

Labour: 100,000 hours
Production:
Petrol: 45,000 metric tonnes
Diesel: 50,000 metric tonnes,
Pre- mix fuel: 40,000 metric tonnes.

Required:
Compute and interpret the following:

i) The efficiency ratio.

ii) The capacity ratio.
iii) The production volume or activity ratio.