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