Al landier Manufacturing and Trading LLC, established in 2004, is one of the leading manufacturer of plastic pipes in Oman. The company established a standard costing system to control the costs. The standard material and labour requirements for one of its product is as under : The company uses three materials L, M and N to produce the finished product. It requires 15 Kgs of L, 20 Kgs of M and 30 Kgs of N to produce hundred units of finished products. The standard purchase price per Kg of the material L, M and N is RO 24, RO 18 and RO 15 respectively. The company has appointed three categories of labour to produce the products. Two skilled, four semi-skilled and three unskilled workers together produce ten units in three hours. The standard labour rate per hour amounts to RO 25, RO 15 and RO 5 for skilled, semi-skilled and unskilled workers respectively. The labour force worked is expected to work for 2700 hours during the year. The variable overheads are charged at the standard rate of RO 1.5 per skilled labour hour. The annual budgeted Fixed Overheads amount to RO 45,000 and are charged based on the standard/budgeted output. The management of the company wants to estimate the standard cost of producing the product to fix the selling price of the product. The companys policy is to have a mark-up of 20% on its products. You are required to estimate the standard cost per unit of the finished product and determine the selling price of the product as per the companys policy.

5 Case Study 2 The Management of Al Jassar Manufacturing and Trading LLC believes that the company need to regularly compare the actual costs with standard costs and to analyse whether the costs incurred are under control. For this purpose, the actual cost data for the year 2019 provided by the production manager is as under : In the year 2019, 8000 units were produced. The production department has consumed 1360 Kgs of L costing RO 36,720; 1400 Kgs of M costing RO 29,400 and 2700 Kgs of N costing RO 35,100. The labour force worked for 2700 hours during the year and the actual group of the labour force included two skilled, five semiskilled and two unskilled workers. The prevailing labour market conditions resulted in the change of labour hour per hour to RO 30, RO 12 and RO 6 for skilled, semi-skilled and unskilled workers respectively. The processing machine broken down for forty hours during which no production was possible. The total actual variable overheads and fixed variable overheads for the year amounted to RO 10,800 and RO 44,000 respectively. The Management of the company appointed you as a consultant to carry out the analysis and submit a report on Variance Analysis of the company for the year 2019. The report should include the following : (a) Material Cost Variances (b) Labour Cost variances (c) Overhead Variances (