Accounting 9706 · AS & A Level · Standard costing

Standard costing — practice question

Alfa makes a single product. Budgeted production and sales in March were 8000 units. The per-unit budgeted figures are provided alongside the actual March results.
(a)[5]

Prepare the trading section of the budgeted income statement for March.

(b)[2]

State two reasons why a business prepares a flexed budget.

(c(i))[2]

Calculate the direct materials price variance for March.

(c(ii))[2]

Calculate the direct materials usage variance for March.

(c(iii))[1]

Calculate the fixed overhead expenditure variance for March.

(c(iv))[8]

Calculate the fixed overhead volume variance for March.

(d(i))[6]

Explain the possible reasons why the direct labour adverse variances may have arisen.

(d(ii))[2]

Explain the possible reasons why fixed overhead variances may arise.

(e)[2]

Explain how the adverse direct labour efficiency variance can be improved.

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