Question 3 a) Sandy Co. prepares the standard cost card for their product called BOT, showing all standard costs and the standard selling price. A single unit of BOT is made by using of three types of material with the following estimates: - 5 kg of direct material B, costing $15.00 per kg - 6 liters of direct material O, costing $16.00 per liter - 7 meters of direct material T, costing $18.00 per meter The standard material prices for all three types of material mentioned above is expected to increase in price by 20% due to better quality material bought, which will result in a 10% reduction in the quantity of material (as shown above) to be used for future production. A special device called Component BT will be needed and it will cost $19.24 per unit. Two types of labor force are involved in the production of a unit of BOT: skilled labor and semi- skilled labor. The hourly labor rate of for each type of labor is $120 for skilled labor and $80 for semi-skilled labor. Twice as many semi-skilled labor hours as skilled labor hours are needed to produce a unit of product BOT and THREE (3) hours of skilled labor hours is needed. Variable production overheads are incurred at the rate of $90.00 per skilled labor hour. A system of absorption costing is in operation on fixed production overhead costs and basis of absorption is using the total labor hours. The budgeted fixed production overheads are $3,000,000 and the budgeted level of activity is 100,000 units. Selling and distribution overheads costs are added to products at the rate of 10% of standard production costs. A profit margin of 20% is made on each unit of BOT that is sold. Required: a) Prepare the Standard Cost Card based on the above information. b) Discuss FOUR (4) types of standards that a company can set for their employees. (15 marks) (10 marks) (Total: 25 marks)