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- August 3, 2022 at 9:57 am #662348
Brake LTD manufactures and distributes brake discs to the automotive sector. The company operates an integrated standard cost system in which:
-Purchase of materials are recorded at standard costs
-Direct material costs and direct labour costs are variable
-Production overheads are fixed and absorbed using direct labour hoursActual and budgeted data for May are shown below:
-Budgeted direct materials per unit- 2kg at 5$ per kg
-Direct Labour- 0.5hours per unit
-Budgeted production for the month was 10,000
-22,500kgs of material were purchased
-The total standard cost of the material was 115,000$
-6,000 direct labour hours were worked of 6$ per hour
-Budgeted Fixed production overheads in the period were 240,000$
-Actual fixed production overheads in the period were 260,000$Variances calculated for May are as follows:
-Material price variance 11,250$ A
-Labour efficiency variance 1,750$ A1- Calculate the actual number of brake discs manufactured (11,500) ?????
2- Calculate the actual price paid per kg of material (5.50)
3- Calculate the material usage variance (2,500 Favorable)I answered questions 2, 3 but I don’t get how they got this figure in the first question.
Thanks in advance
August 3, 2022 at 10:01 am #662350I am getting 12,000. 6000/0.5 = 12,000. But the answer is 11,500.
August 3, 2022 at 10:15 am #662358The standard cost per unit of materials is 2kg x $5 = $10.
The total standard cost of the material used is $115,000.
Therefore they must have manufactured 115,000/10 = 11,500 units.
August 3, 2022 at 10:20 am #662359thanks a lot sir.
August 3, 2022 at 4:24 pm #662386You are welcome 🙂
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