Intermediate: Calculation of variances and accounting entries for an interlocking standard costing system B Ltd manufactures a
Question:
Intermediate: Calculation of variances and accounting entries for an interlocking standard costing system B Ltd manufactures a single product in one of its factories. Information relating to the month just ended is as follows:
(i) Standard cost per hundred units:
(ii) 226000 units of the product were completed and transferred to finished goods stock.
(iii) 34 900 kilos of raw material were purchased in the month at a cost of £245 900.
(iv) Direct wages were £138 545 representing 22 900 hours’ work.
(v) Variable production overheads of £113 800 were incurred.
(vi) Fixed production overheads of £196 800 were incurred.
(vii) Stocks at the beginning and end of the month were:
Finished goods 278 000 units 286000 units Raw materials, work in progress, and finished goods stocks are maintained at standard cost. You should assume that no stock discrepan¬ cies or losses occurred during the month just ended.
Required:
(a) Prepare the cost ledger accounts relating to the above information in B Ltd’s interlocking accounting system. Marginal costing prin¬ ciples are employed in the cost ledger.
(17 marks)
(b) Explain and contrast the different types of standards that may be set as a benchmark for performance measurement. (8 marks)
(Total 25 marks) ACCA Cost and Management Accounting 1
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