Accounting 9706 · AS & A Level · Standard costing

Standard costing — practice question

Section B: Cost and Management Accounting. Use Source B1 from the insert.
(a(i))[2]

Calculate the sales volume variance for month 2.

(a(ii))[2]

Calculate the material price variance for month 2.

(a(iii))[2]

Calculate the material usage variance for month 2.

(a(iv))[2]

Calculate the labour rate variance for month 2.

(a(v))[2]

Calculate the labour efficiency variance for month 2.

(b(i))[2]

Discuss how the material price variance changed from month 1 to month 2. Suggest one reason for this change.

(b(ii))[2]

Discuss how the material usage variance changed from month 1 to month 2. Suggest one reason for this change.

(b(iii))[2]

Discuss how the labour rate variance changed from month 1 to month 2. Suggest one reason for the change.

(b(iv))[2]

Discuss how the labour efficiency variance changed from month 1 to month 2. Suggest one reason for the change.

(c)[5]

Advise Tommy whether he should also begin calculating fixed overhead variances. Justify your answer.

(d)[2]

State two reasons why establishing standard costs may be helpful, apart from variance analysis.

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