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Standard costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Standard costing

  • This topic has 4 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • August 3, 2022 at 9:57 am #662348
    Sukuna
    Participant
    • Topics: 25
    • Replies: 37
    • ☆☆

    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 hours

    Actual 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$ A

    1- 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 #662350
    Sukuna
    Participant
    • Topics: 25
    • Replies: 37
    • ☆☆

    I am getting 12,000. 6000/0.5 = 12,000. But the answer is 11,500.

    August 3, 2022 at 10:15 am #662358
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54711
    • ☆☆☆☆☆

    The 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 #662359
    Sukuna
    Participant
    • Topics: 25
    • Replies: 37
    • ☆☆

    thanks a lot sir.

    August 3, 2022 at 4:24 pm #662386
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54711
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 5 posts - 1 through 5 (of 5 total)
  • The topic ‘Standard costing’ is closed to new replies.

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