The retail group has introduced a new product and uses a standard cost system. Standard costs for 1 000 kilograms of the new product are:

Requirements	Quantity	Price per kilogram	Total Cost
	Kilograms
a	1 600	0.50	800
b	400	0.80	320
c	400	0.20	80
Input	2 400		600
Output	2 000		400

The production of 1 000 kilograms of the new product requires 1 200 kilograms of raw materials. Hence the yield is 1 000 / 1 200 or 5/6 of input. Materials records indicate.

Materials	Opening Inventory	Purchases (units) in April	Closing Inventory
A	20 000 kilograms	324 000 @ 0.48	30 000 kilograms
B	24 000 kilograms	60 000 @ 0.84	8 000 kilograms
C	30 000 kilograms	64 000 @ 0.22	22 000 kilograms

To convert 1 200 kilograms of raw materials into 1 000 kilograms of finished product required 25 hours of labour at 8.25 per hour. Actual direct labour hours and costs are 3,800 hours at 31,350. Factory overhead is applied on a direct labour hour basis at a rate of 9 per hour (5 fixed, 4 variable).

Factory overhead is 36,000 with 4,000 direct labour hours. Actual overheads are 38,000, Actual finished production is 200,000 new products.

The standard cost per kilogram of the finished product:

Materials	0.60 per kilogram
Labour	0.24 per kilogram
Factory overheads	0.20 per kilogram

The standard selling price per unit 25% mark up on total cost. The actual selling prices 20% mark up on total cost.

REQUIRED:

a- Calculate the actual and standard total and unit costs of the finished product

b- Produce an absorption costing statement showing the marginal cost.(use actual costs)

c- Calculate the materials, labor and overhead variances.

d- Interpret the variance results considering both financial and non-financial factors.

e- Evaluate the use of different costing methods for pricing purposes