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Goodafternoon Mr Moffat,
the high low method was for the overheads,
And yes, as for discount the question stated:
The supplier of Material CD gives a 10% discount on the excess of purchases over 6,000
kg per period.
During the period, the company manufactured 17,000 units of the product and
incurred the following production costs:
Direct materials:
Material AB $5,025
Material CD $25,118
Labour (direct and indirect) $32,889
Overhead (excluding indirect labour) $13,315Hi Mr Moffat, Here I have a question on Kaplan:
A company manufactures a single product and has the following flexible production cost
budgets for a period.
Production quantity 12,000 units 15,000 units 18,000 units
Direct material AB $3,600 $4,500 $5,400
Direct material CD $17,760 $22,200 $26,196
Labour (direct and indirect) $25,700 $29,900 $35,150
Overhead (excluding indirect labour) $12,400 $13,180 $13,960The question asks:
Calculate the flexed statement for the period showing for each of the four
items of cost and calculate the variance indicating if it is favourable (f) or
adverse (a) (to the nearest whole $)Flexed budget Flexed Actual cost Variance
Activity level 17,000 17,000
Costs
Material AB 5,025
Material CD 25,118
Labour 32,889
Overhead 13,315The answer gives:
I sort of understood the answer for the labour and the overhead given the high low method whereby we find the fixed cost and add it on the flexed figure of 17000 times 1.58 (the variable cost).
For Material AB i found the standard cost per unit to be $0.30 and it perfectly matches with the answer provided. However, I am having a very hard time finding the Method of calculating/finding the Standard cost per unit for Material CD. I have been stuck on this question for a very long time. I have tried all of your lecture videos but cannot find nothing that could help. Please, could you help with the Material CD answer step by step solution.Thank you very much in advance
