Accounting 9706 · AS & A Level · Standard costing

Standard costing — practice question

Study Source A in the insert.
(a)[3]

Prepare the flexible budget statement for March and show the budgeted profit.

(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 variance for labour efficiency.

(c)[2]

Explain why the fixed overhead volume variance occurs.

(d)[5]

Prepare a statement that reconciles flexible budget profit with actual profit.

(e)[7]

Advise the directors whether W Limited should stop using the standard costing system, and justify your response.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: Budgeted sales revenue $800000; direct materials $150000; direct labour $480000; fixed overhead $100000

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