Accounting 9706 · AS & A Level · Standard costing

Standard costing — practice question

Refer to Source B2 in the Insert.
(a(i))[2]

Calculate the following variances for September: Material price.

(a(ii))[2]

Calculate the following variances for September: Material usage.

(a(iii))[2]

Calculate the following variances for September: Labour rate.

(a(iv))[2]

Calculate the following variances for September: Labour efficiency.

(b)[4]

Suggest one likely cause for each of the variances calculated in (a): material price variance, material usage variance, labour rate variance and labour efficiency variance.

(c(i))[2]

Calculate the following variances for September: Fixed overhead expenditure.

(c(ii))[2]

Calculate the following variances for September: Fixed overhead volume.

(d)[5]

Explain how October’s fixed overhead volume variance may be broken down further to give Jack more information about how the business performed.

(e)[4]

State two advantages and two disadvantages for Jack of using a standard costing system.

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