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- This topic has 1 reply, 2 voices, and was last updated 4 weeks ago by John Moffat.
- February 20, 2023 at 3:32 am #679159laksh.kumarParticipant
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- Replies: 0
Bedco manufactures bed sheets and pillowcases, which it supplies to a major hotel
chain. It uses a just-in-time system and holds no inventories.
The standard cost for the cotton which is used to make the bed sheets and pillowcases is
$5 per m2.
Each bed sheet uses 2 m2 of cotton and each pillowcase uses 0.5 m2. Production levels
for bed sheets and pillowcases for November were as follows:
Budget production levels Actual productions levels
Bed sheets 120,000 120,000
Pillow cases 190,000 180,000
The actual cost of the cotton in November was $5.80 per m2. 248,000 m2 of cotton was
used to make the bed sheets and 95,000 m2 was used to make the pillowcases.
The world commodity prices for cotton increased by 20% in the month of November. At
the beginning of the month, the hotel chain made an unexpected request for an
immediate design change to the pillowcases. The new design required 10% more cotton
than previously. It also resulted in production delays and therefore a shortfall in
production of 10,000 pillowcases in total that month.
The production manager at Bedco is responsible for all buying and any production issues
which occur, although they are not responsible for the setting of standard costs.
How will we calculate Actual Quanity in Standard Mix and Standard Quantity for Actual Output in this case?February 20, 2023 at 7:51 am #679166John MoffatKeymaster
- Topics: 56
- Replies: 51875
I am a little bit puzzled because surely you have the examiners answer to this question which does show how the quantities you ask about are calculated?
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