Accounting 9706 · AS & A Level · Standard costing

Standard costing — practice question

Billyjo manufactures one product. The business uses a standard costing system, and every item produced in the month is sold, with no inventory carried.
(a)[2]

Explain what the term 'standard costing' means.

(b(i))[2]

Calculate the variance for material price.

(b(ii))[2]

Calculate the variance for material usage.

(b(iii))[2]

Calculate the variance for labour rate.

(b(iv))[2]

Calculate the labour efficiency variance using the figures given.

(c)[8]

Analyse the likely reasons for the variances calculated in (b).

(d)[4]

Calculate Billyjo's actual profit for April.

(e)[3]

Recommend ways Billyjo could improve the performance of his business.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: Set predetermined costs and revenues

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