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Product A is one of the products that are manufactured by a company. The following direct cost standards were set, for each batch of 50 units of Product A, for the period just ended:
Materials: 10 kg of Material X at $17.50 per kg
5 litres of Material Y at $9.20 per litre
Labour: 20 hours at $12.50 per hourVariable production overheads were absorbed at a standard rate of $3.70 per direct labour hour.
Fixed production overheads were absorbed at a standard rate per machine hour using the following budgeted data for the factory:
Budgeted fixed production overheads $51,000
Budgeted machine hours 1,700Each batch of Product A requires 8 machine hours.
40 batches of Product A were manufactured in the period just ended and the following direct resources were used:
Material X 416 kg
Material Y 195 litres
Labour 838 hoursTask 1
What was the standard total variable production cost per unit of Product A (to two decimal places)? $
What was the standard fixed production overhead cost per unit of Product A (to two decimal places)? $
What was the labour efficiency variance? $_______
Sir i need you help .
its mention there each batch of 50 units of product a n 40 batches or product a were manufactured
should i multiply 50units*40 batches= 2000 unitsEach batch of Product A requires 8 machine hours. so total machine hour will be 8hours*40 batches .
kindly explain this Question i am confused.
You are given the standard costs per batch of 50 units.
Therefore to get the standard cost per unit, you divide the standard cost per batch by 50 units.For fixed production overheads, they are absorbed on the basis of machine hours, so to get the standard cost per unit divide the budget overheads of $51,000 by the budgeted machine hours of 1,700, which gives $30 per hour.
Each batch takes 8 hours, so the standard overhead per batch is 8 x $30 = $240.
Each batch is 50 units, so the standard overhead per unit is $240/50 = $4.80.For the labour efficiency variance, they actually produced 40 batches and the standard labour time per batch is 20 hours so they should have taken 40 x 20 = 800 hours (whereas they actually took 838 hours).
thank you very much apologies I did not realize that I used the student forum.
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