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Revised Standard Cost of Actual Output

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Revised Standard Cost of Actual Output

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • November 26, 2017 at 4:58 pm #418109
    angelaht
    Participant
    • Topics: 1
    • Replies: 4
    • ☆

    Dear Sir,

    Can you show me where I got wrong on the below question, it is about standard cost:

    EFB manufactures paint from 3 ingredients: Pigments, Resin and Solvent
    Ech batch consists of 10 kgs of ingredients from which 180 pots painty of acceptable quality should be manufactured
    Planned to make 10 batches/ month

    Standard cost:
    Pigments = 2kgs @ €30/kg
    Resin = 7.5kgs @ €15/kg
    Solvent = 0.5 kgs @ €120/kg

    Revised standard cost after first month:
    Pigments = 1.8kgs @ €33/kg
    Resin = 7.5kgs @ €15/kg
    Solvent = 0.5 kgs @ €120/kg

    In month 2, 11 batches were made with only 1845 good quality pots of paint.

    The actual Input and cost:
    Pigments = 21kgs @ €32/kg
    Resin = 80.5kgs @ €16/kg
    Solvent = 6.5 kgs @ €110/kg

    QUESTION:
    Calculate the revised standard cost of actual output

    ANSWER
    I used the revised standard cost:
    9.8kgs produce 180 pots.
    Hence, 1845 post should have used 100.45 kgs ((1845*9.8)/180)

    From there I got the input should have been:
    Pigments = 18.45 kgs @ €33/kg = €608.85
    Resin = 76.875 kgs @ €15/kg = €1153.125
    Solvent = 5.125 kgs @ €120/kg = €615

    So the revised standard cost of actual output is €2375.975

    SOLUTION
    Revised budgeted cost of standard monthly production, based on the revised standard cost:

    Pigments = 1.8kgs @ €33/kg = €59.4
    Resin = 7.5kgs @ €15/kg = €112.50
    Solvent = 0.5 kgs @ €120/kg = €60
    Total for 10 batches is = (59.4+112.5+60)*10 = €2319

    Revised standard cost per pot:
    2319/ (180 pots per batch * 10 batches per month) = €1.2883333

    The standard cost of actual output:
    1.2883333 * 1845 actual pots produced = €2377

    QUERY:
    I do understand the solution. However, I couldnt figure out where I got wrong on my answer.

    Many thanks,
    Angela

    November 27, 2017 at 7:16 am #418339
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    Both approaches are fine – the difference is simply one of rounding (which is irrelevant in the exam).

  • Author
    Posts
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  • The topic ‘Revised Standard Cost of Actual Output’ is closed to new replies.

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