Mean Limited manufactures a single product, and the following information relates to the actual selling price and actual cost of the product for the four weeks to 31 March 2016: 

The budgeted selling price and standard cost of each unit was as follows: 

Total budgeted production: 40 000 units. 

Required:

(a) Prepare a standard cost operating statement for the four weeks to 31 March 2016 incorporating as many variances as the data permit.

(b) Explain how the statement may help the managers of Mean Limited to control the business more effectively.

Transcribed Image Text:

Sales (50 000 units) Direct materials (240 000 litres) Direct labour (250 000 hours) Variable production overhead Fixed production overhead Loss £000 2 250 528 1375 245 650 2 798 (548)