Reference no: EM132627174

Windhoek Beauty Products ("WBP") applies a standard marginal costing system to produce a cosmetic that they sell in the Namibian market.

The details of their production for the month of August 2020 are as follows:

                                            Budget                                  Actual

Sales/production in units             6,000                           5,500

Total sales revenue                  N$600,000                  N$660,000

Total materials                        24,000kgs                    24,750kgs

Material cost                             N$240,000               N$222,750

Total labour hours                     18,000 hours           15,125 hours

Total labour cost                        N$216,000                  N$211,750

Fixed production overheads             N$100,000                 N$110,000

The company applies an efficient just in time technique and so does not keep inventories of any kind.WBP's strategy is to ensure that they retain a motivated staff compliment that would always go an extra mile to ensure the company's profitability.

Question 1: Prepare standard cost card for one unit of the cosmetic.

Question 2: Calculate all the possible variances and present them in a statement that reconciles budgeted contribution to the actual.

Question 3: Advise WBP on the best standards to use in order to achieve their strategic objectives. Your answer should justify why other standards are not appropriate.

Question 4: Some people say standard costing is no longer relevant in the current business environment. List three advantages of using standard costing