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 6 years ago by John Moffat.
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- November 26, 2017 at 4:58 pm #418109
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/ monthStandard cost:
Pigments = 2kgs @ €30/kg
Resin = 7.5kgs @ €15/kg
Solvent = 0.5 kgs @ €120/kgRevised standard cost after first month:
Pigments = 1.8kgs @ €33/kg
Resin = 7.5kgs @ €15/kg
Solvent = 0.5 kgs @ €120/kgIn 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/kgQUESTION:
Calculate the revised standard cost of actual outputANSWER
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 = €615So 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 = €2319Revised standard cost per pot:
2319/ (180 pots per batch * 10 batches per month) = €1.2883333The standard cost of actual output:
1.2883333 * 1845 actual pots produced = €2377QUERY:
I do understand the solution. However, I couldnt figure out where I got wrong on my answer.Many thanks,
AngelaNovember 27, 2017 at 7:16 am #418339Both approaches are fine – the difference is simply one of rounding (which is irrelevant in the exam).
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