Green light test standard costing

Alaa

I need help with this question please

davealucas

It is a matter of calculating how much raw material you need to produce the actual units.

If you are expected to use 1,020 metres of raw material to produce 850 units but you end up producing 890, then you have used more raw material. the calculation is 1,020 metres divided by 850 units times by 890 unit. This means that you actually used 1,068 metres of raw material.

The standard cost is £8.20 per metre times by 1,068 metres of raw material making the standard cost of production at £8,757.60

Alaa

Why do we need to get the actual meters ? I didn’t understand the question is it asking about the price or the total cost which should be actual units x standard cost per unit . Thanks

fedemenni

the question asking you the total standard material cost (which means the budgeted quantity x price of the material) you need to see how much material is needed for each quantity, to find this out is 1020 (metres of raw material) divided by 850 units produced (budget because the business expects it)

the standard cost for each metre is given of £8.20.

Now that you have standard meter per unit you can calculate how many metres you will require to calculate the total standard material = 890 units x 1.2 meter per unit x £8.20 = £8757.60

hope it makes more sense.
Btw I am doing the same module

Alaa

Thanks a lot indeed . I wonder if you can help me with another question in the same unit . What is the affect of attainable standard cost on both material and labour variance ?

fedemenni

Alaa said:

Thanks a lot indeed . I wonder if you can help me with another question in the same unit . What is the affect of attainable standard cost on both material and labour variance ?

is there anything else in the question?

Alaa

That was task 5 came in the exam they gave me a table for labour and usage variance and they wanted me to compare the affect of attainable and basic standard on both variances .

fedemenni

I think I need more informations to help with this one.

Alaa

It was similiar to task 5 in sample assessment 2 same everything but instead of ideal standard they were asking about attainable standards . I attached a photo of it