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Calculate the standard prime cost card of the product

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Reference no: EM132531728

Zebra Ltd. manufactures a component for the construction industry, based on plastic which is then painted, through a relatively simple, labour intensive process. Based on historical data, the company calculated the following standards concerning direct inputs:

Plastic: 2 kg @ £15.00/kg

Paint: 0.1 litres @ £20.00/litre

Direct labour: 0.5hrs @ £10.00/hr

Zebra Ltd. recorded the following data regarding last month operations:

Units produced: 10,000 units

Plastic purchased: 21,000 kg @ £16.00/kg

Paint purchased: 1,050 litres @ £18.00/litre

Direct labour: 4,600 hrs @ £10.50/hr

  • There were no beginning or ending inventories.

Required:

Question (a) Calculate the standard prime cost card of the product.

Question (b) Calculate the flexible cost budget for the actual production level.

Question (c) Calculate total, price and usage variances for direct materials

Question (d) Calculate total, wage rate and efficiency variances for direct labour.

Question (e) Interpret reported variances, trying to identify possible 'real-life' factors and relations between them.

Question (f) Highlight other potential benefits of budgeting for Zebra Ltd.

Reference no: EM132531728

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