Accounting 9706 · AS & A Level · Standard costing

Standard costing — practice question

Read Source B1 in the Insert carefully.
(a)[2]

Calculate the overall budgeted profit for August.

(b)[1]

Calculate the actual profit earned in August.

(c(i))[2]

Calculate the sales price variance from the figures given.

(c(ii))[2]

Calculate the sales volume variance using the standard profit margin per unit.

(c(iii))[2]

Calculate the labour rate variance from the data.

(c(iv))[2]

Calculate the labour efficiency variance from the hours information.

(c(v))[2]

Calculate the fixed overhead expenditure variance for the period.

(c(vi))[2]

Calculate the fixed overhead volume variance for the data provided.

(d)[5]

Prepare a statement that reconciles the budgeted profit at 4000 units level with the actual profit. You should begin the statement with the budgeted profit in (a).

(e)[5]

Advise the directors on whether T Limited ought to move to the new supplier or stay with the present one. Justify your answer.

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