- 14 Marks
Calculate the standard quantity of material used in production for GrainWorks Plc.
Question
GrainWorks Plc uses a standard costing system. Fixed production overhead is absorbed on the basis of direct labour hours. The following data relate to a particular period of operation:
| Description | Value |
|---|---|
| Standard price of material/kg | GH₵45.90 |
| Actual material issued to production | 4,110 kg |
| Standard labour hours | 1,680 |
| Actual direct labour hours | 1,760 |
| Actual fixed overhead | GH₵45,620 |
The following variances were calculated at the end of the period:
| Variance | Value |
|---|---|
| Direct material cost | GH₵702 (A) |
| Direct material usage | GH₵531 (F) |
| Direct labour efficiency | GH₵336 (A) |
| Direct labour cost | GH₵16 (F) |
| Fixed overhead cost | GH₵92 (F) |
Required:
(a)(i) Calculate the standard quantity of material.
(ii) Calculate the actual price of material per kg.
(iii) Calculate the standard direct labour rate.
(iv) Calculate the actual direct labour rate.
(b) State TWO benefits to be obtained from the installation of a standard costing system.
Find Related Questions by Tags, levels, etc.
- Tags: Direct Labour, Fixed Overhead, Material Usage, Standard Costing, Variance analysis
- Level: Level 2
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