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Castilda Co manufactures toy robots and uses a standard costing system to value inventory. The document provides a partially completed spreadsheet and standard costing operating statement for Month 1, asking questions about calculating variances, identifying missing information, and explaining potential interrelationships between variances.

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Neel Kosto
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44 views

For More ACCA Study Materials, Tutor Support, Exam Tips Visit

Castilda Co manufactures toy robots and uses a standard costing system to value inventory. The document provides a partially completed spreadsheet and standard costing operating statement for Month 1, asking questions about calculating variances, identifying missing information, and explaining potential interrelationships between variances.

Uploaded by

Neel Kosto
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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2 Castilda Co manufactures toy robots.

The company operates a standard marginal costing


system and values inventory
at standard cost.
The following is an extract of a partly completed spreadsheet for calculating variances in
month 1.
Required:
(a) Which formula will correctly calculate the figure in B18?
A = (C9*C4)- B13
B =B13-(C9*C4)
C = (C9*C4)- (150,000*8)
D =(150,000-(C9*6))*8 (2 marks)
14

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(b) Castilda Co uses a standard costing operating statement to reconcile budgeted


contribution with actual
contribution.
A standard cost operating statement for Month 1 is given below with some information
missing.
Standard costing operating statement Month 1
$$
Budgeted contribution 700,000
Gap 1 Gap 2
Standard contribution on actual sales
Sales price variance Gap 3

711,680

Cost variances
Total direct materials variance 12,800 adv
Direct labour rate variance 21,000 adv
Direct labour efficiency variance 48,000 fav
Total variable production overhead variance 10,000 fav

24,200 fav

Actual contribution 735,880

Required:
(i) Which is the correct title for Gap 1?
A Sales volume variance
B Total sales variance
C Fixed overhead volume variance (1 mark)
(ii) Calculate the variance for Gap 2 and state whether it is favourable or adverse.
(25 marks)
(iii) What is the sales price variance in Gap 3 and state whether it is favourable or
adverse. (25 marks)
(c) Castildas management accountant thinks that the direct labour rate and efficiency
variances for Month 1 could
be interrelated.
Required:
Which TWO of the following could explain their interrelationship?
A Higher grade labour performed tasks more efficiently
B Lower grade labour performed tasks less efficiently
C A productivity bonus was paid to direct labour

D Actual production was less than budgeted (2 marks)


(10 marks)
15 [P.T.O.

For More ACCA Study Materials, Tutor Support, Exam Tips Visit:
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3

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