- 10 Marks
MA – April 2022 – L2 – Q3a – Standard costing and variance analysis
Prepare a standard cost card and calculate variances for Plytimba's recent financial period.
Question
Plytimba manufactures high-quality wooden chairs using odum sourced from sustainable forests. The company began trading two years ago having identified a niche market for the product.
During the year, Plytimba was forced to purchase wood from a different company as the usual supplier did not have sufficient stock available. The company operates a standard variable costing system and details relating to the most recent financial period are shown below.
Budgeted Information:
- Production in units: 134,400
- Direct materials: 10,080 square metres odum wood = GH¢282,240
- Direct labour: 33,600 hours = GH¢483,840
- Variable production overhead (based on direct labour hours): GH¢225,792
- Fixed production overhead: GH¢29,200
Actual Information:
- Production in units: 135,000
- Direct materials: 10,800 square metres odum wood = GH¢300,240
- Direct labour hours: 27,000 hours = GH¢486,000
- Variable production overhead: GH¢194,400
- Fixed production overhead: GH¢30,150
Required:
i) Prepare a Standard Cost Card for one wooden chair. (4 marks)
ii) Calculate SIX (6) variances in as much detail as the information above permits. (6 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Labor Variance, Material Variance, Overhead Variance, Standard Costing, Variance Analysis
- Level: Level 2
- Topic: Standard Costing and Variance Analysis
- Series: APR 2023
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