Q 18

Rice Processors Plc uses a standard costing system. Fixed production overhead is absorbed on the basis of direct labour hours. The following data relate to a particular period of operation

Standard price of material/kg GHS5.90

Actual material issued to production 4,110kg

Standard labour hours 1,680

Actual direct labour hours 1,760

Actual fixed overhead GHS5,620

The following variance were calculated at the end of the period

GHS

Direct material cost 702(A)

Direct material usage 531(F)

Direct labour efficiency 336(A)

Direct labour cost 16 (F)

Fixed overhead cost 92(F)

Required

1. Calculate:

i standard quantity of materials

ii actual price of materials per kg

iii standard direct labour rate

iv actual direct labour rate

2. State two benefits to be obtained from the installation of a standard costing system