Question
Windhoek Beauty Products applies a standard marginal costing system to produce a cosmetic that sell in the Namibia market. The details of their production for
Windhoek Beauty Products applies a standard marginal costing system to produce a cosmetic that sell in the Namibia market. The details of their production for the month of August 2020 are as follows : Sales / production in units 6000 budget 5500 actual Total sales revenue N$600 000 budget N$660 000 actual Total materials 24 000 kgs budget 24 750 actual Material cost N$240 000 budget N$222 750 actual Total labour hours 18 000hrs budget 15125hours actual Total labour cost N$216 000 budget N$211 750 actual Fixed production overheads N$100 000 budget N$110 000 actual The company applies an efficient just in time technique and so does not keep inventories of any kind. Windhoek Beauty Products strategy is to ensure that they retain a motivated staff compliment that would always go an extra mile to ensure the company's profitability.
Requirement 3.1 Prepare a standard cost card for one unit of the cosmetic. 3.2 Calculate all the possible variences and present them in a statement that reconciles budgeted contribution to the actual. 3.3 Advise WBP on the best standard to use in order to achieve their strategic objectives. Your answer should justify why other standards are not appropriate. 3.4 some people say standard costing is no longer relevant in the current business environment. List three advantages of using standard costing.
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