A single product company operates a standard costing system. Its production budget for May 19_4 was as follows:

Required:

(a) Analyse the variances. (12 marks)

(b) Discuss how standard costing can help in planning and control.

Transcribed Image Text:

Materials: (A) 5 000 lbs (B) 7 500 lbs. Labour: 1 000 hours 2.500 2 250 4.000 8 750 Fixed overheads 1.500 Production (5 000 units) cost 10 250 Actual results for May 19_4 were as follows: Materials: (A) 6 000 lbs 2 400 (B) 6 000 lbs 2 400 Labour: 900 hours 4 500 9 300 Fixed overheads 1.500 Production (4 700 units) cost 10 800