Standard cost of product A

Materials (5 kgs at RM 10 per kg)

Labour (4 hrs at RM5 per hr)

Variable overheads

(4 hrs at RM2 per hr)

Fixed overheads

(4 hrs at RM6 per hr)

Budgeted Data		Actual Results
Production:	1,200 units	Production:	1,000
Sales:	1,000 units	Sales:	900 units
Selling price:	RM 150 per unit	Materials:	4,850 kgs, RM 46,075
		Labour:	4,200 hrs, RM 21,210
		Variable overheads:	RM 9,450
		Fixed overheads:	RM 25,000
		Selling price	RM 140 per unit

Required:

1. Calculate ALL variances (16 marks) 2. Explain THREE (3) advantages a system of standard costing might bring to a company. (3 marks)

3. Describe THREE (3) disadvantages a system of standard costing. (3 marks) 4. Name THREE (3) individuals who are involved in the setting up of the standard cost. (3 marks)

[Total: 25 Marks]

[GRAND TOTAL: 100 MARKS]

2

Formulas:

Sales Price variance: (AP-SP)AQ

Sales Volume variance: standard profit(AQ-SQ)

Fixed Overhead Spending variance: Actual Budget = Actual (SH x SR X BQ) whereby BQ is budgeted quantity

Fixed Overhead Volume variance: Budget Applied = (SH x SR X BQ) - (SH x SR X AQ) Direct Materials Price variance = (AP-SP)AQ

Direct Materials Quantity variance = (AQSQ)SP

Direct Labor Rate variance= (AR-SR)AH

Direct Labor Efficiency variance = (AH-SH)SR

Variable Overhead Spending variance = (AR-SR)AH

Variable Overhead Volume variance = (AH-SH)SR