Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Standard Costing
- This topic has 3 replies, 3 voices, and was last updated 2 years ago by John Moffat.
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- September 21, 2021 at 7:45 pm #636169
When considering setting standards for costing which of the following would NOT be considered
relevant?
A The normal level of activity should always be used for absorbing overheads.
B Average prices for materials should be used, encompassing any discounts that are regularly available.
C The labour rate used will be the rate at which labour is paid.
D Average material usage should be established based on generally accepted working practicesAnswer C.
I am unable to get answer as well as question. Please help Tutor.
If you will tell why other answers are incorrect it would be so nice of you.September 22, 2021 at 6:47 am #636234When calculating the standard cost we use the expected level of activity and the expected costs.
So A is relevant – the normal/expected level of activity is what is used.
B is relevant – the average price of materials is what we expect we will pay.
C is not relevant – it is not what we actually pay but what we expected to will pay
D is relevant – it is the usage of material that we expect will happen.
September 22, 2021 at 4:42 pm #636327I was also stucked. Thank you.
September 23, 2021 at 8:46 am #636350You are welcome
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