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Standard cost of sales

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Standard cost of sales

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 22, 2022 at 6:14 pm #649127
    Amrit123
    Participant
    • Topics: 26
    • Replies: 23
    • ☆

    Here in bpp kit,
    Admin selling and distribution cost are also included in standard cost of sales

    Need explanation sir
    Q.24.8

    February 22, 2022 at 7:04 pm #649138
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    I can only think that you are using an old edition of the Revision Kit, because question 24.8 in the current edition of the Paper MA Revision Kit is nothing to do with what you have asked.

    February 23, 2022 at 3:52 am #649154
    Amrit123
    Participant
    • Topics: 26
    • Replies: 23
    • ☆

    24.8 Swindle Co makes widgets. Two types of labour are involved in the production of a widget, skilled and unskilled. Skilled labour is paid $15 per hour and unskilled $3 per hour. Twice as many unskilled labour hours as skilled labour hours are needed to produce a widget, six unskilled labour hours being needed.
    A widget is made up of two different direct materials. Five kg of Material X and two metres of Material Z are needed. Material X costs $2 per kg and Material Z $5 per metre.
    Variable production overheads are incurred at Swindle at the rate of $3.00 per direct skilled labour hour.
    The basis of fixed cost absorption is direct skilled labour hours. For the coming year, budgeted fixed production overheads are $100,000 and budgeted production of widgets is 10,000 units.
    Administration, selling and distribution overheads are added to products at the rate of $20 per widget, and a mark-up of 15% is made on each.
    Task 1
    Complete the standard cost card for a widget:
    Standard cost card for a widget $ Direct materials – X …..
    Direct materials – Z ….
    Direct labour – skilled…..
    Direct labour – unskilled…..
    Variable production overhead…..
    Fixed production overhead…..
    Admin selling and distribution overhead.. Standard cost of sale….
    Standard profit…
    Standard sales price…

    This is the question sir
    Here to get standard cost of sales
    Bpp has added all the cost along with admin selling and distribution overhead, is that correct?

    February 23, 2022 at 11:46 am #649194
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    Yes it is correct and is forced on you anyway by the layout of the question.

    It is when calculating the standard cost of production (for the valuation of inventory) that we only bring in the standard costs of production.

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