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Standard Cost Card

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Standard Cost Card

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 11, 2017 at 8:37 pm #415300
    agnieszkap
    Member
    • Topics: 4
    • Replies: 4
    • ☆

    Good evening Mr John,

    It’s probably something simple, but I’m blank…
    Could you help on the following questions:

    1)Isma plc has budgeted to produce and sell 20,000 units of Rondal in 20X7. The standard cost card for a unit of Rondal is as follows:

    $

    Materials 3.00

    Labour 5.00

    Variable production overhead 2.50

    Fixed production overhead 2.00

    Variable sales overhead 0.75

    Fixed sales overhead 1.25

    Profit 0.50

    _____

    Selling price 15.00

    _______

    In 20X7, Isma plc produces 21,000 units and sells 19,000 units. Its costs incurred were as expected for this level of activity.

    1How much fixed overhead in total did Isma expect to incur in 20X7?

    Select one:
    a.
    $60,000
    b.
    $55,000
    c.
    $65,000
    d.
    $70,000

    2)Isma plc has budgeted to produce and sell 20,000 units of Rondal in 20X7. The standard cost card for a unit of Rondal is as follows:

    $

    Materials 3.00

    Labour 5.00

    Variable production overhead 2.50

    Fixed production overhead 2.00

    Variable sales overhead 0.75

    Fixed sales overhead 1.25

    Profit 0.50

    _______

    Selling price 15.00

    _______

    In 20X7, Isma plc produces 21,000 units and sells 19,000 units. Its costs incurred were as expected for this level of activity.

    What was Isma plc’s inventory valuation under an absorption costing system?

    Select one:
    a.
    $23,000
    b.
    $24,000
    c.
    $25,000
    d.
    $22,000

    Thanks in advance for you help!

    November 12, 2017 at 11:09 am #415383
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    Please do not simply type out full questions and expect an answer!
    You must have an answer in the same book in which you found the question, and so you should ask about whatever it is in the answer that you are not clear about – then I will help you.

    1.
    They would expect (by definition) the fixed overheads to be the same as the total budgeted fixed overheads i.e. the budgeted production and sales multiplied by the standard fixed costs per unit.

    2.
    Since they produced 21,000 and only sold 19,000, the closing inventory must be 2,000 units.
    Inventory is valued at the standard production cost per unit (i.e. ignoring any sales costs).

    It would seem that you have not watched my free lectures on this and I suggest that you do. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.

    November 12, 2017 at 5:47 pm #415440
    agnieszkap
    Member
    • Topics: 4
    • Replies: 4
    • ☆

    Hi Sir,

    I’m sorry, I know I should put more work into it.

    1) Oh, it seems to be easy now:

    Budgeted units 20,000 x 3.25 (fixed prod + fixed sales O/H) = 65,000

    2) The same with that one:

    (Material+Labour+Variable Prod O/H+Fixed Prod O/H) 12.5 * 2,000 = 25,000

    Thanks a million for your help and patience.

    November 13, 2017 at 9:35 am #415501
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    You are welcome (and please do watch the free lectures 🙂 )

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Standard Cost Card’ is closed to new replies.

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