The following data relate to actual output, costs and variances for the four-weekly accounting period number 4 of a company that makes only one product. Opening and closing work in progress were the same.
|
(£000) |
|
|
Actual production of product XY |
18000 units |
|
Actual costs incurred: |
|
|
Direct materials purchased and used (150 000 kg) |
210 |
|
Direct wages for 32 000 hours |
136 |
|
Variable production overhead |
38 |
|
(£000) |
|
|
Variances: |
|
|
Direct materials price |
15 F |
|
Direct materials usage |
9A |
|
Direct labour rate |
8A |
|
Direct labour efficiency |
16 F |
|
Variable production overhead expenditure |
6A |
|
Variable production overhead efficiency |
4F |
Variable production overhead varies with labour hours worked. A standard marginal costing system is operated.
You are required to:
(a) present a standard product cost sheet for one unit of product XY,
(b) describe briefly three types of standard that can be used for a standard costing system, stating which is usually preferred in practice and why.