Question

From the information given below you are required to:

Prepare a standard cost sheet for one unit and enter on the standard cost sheet the costs to show sub-totals for:

(i) prime cost

(ii) variable production cost

(iii) total production cost

(iv) total cost

The following data are given:

Budgeted/expected  output for the year 9800 units        

Standard details for one unit:

Direct materials 40 square metres at £5.30 per square metre

Direct wages:

Bonding department 48 hours at £2.50 per hour

Finishing department 30 hours at £1.90 per hour

Budgeted costs and hours per annum:

Variable overhead:                   (£)                  (hours)

Bonding department                 375 000                        500 000

Finishing department                150 000                         300 000

Fixed overhead:

Production                              392 000

Selling and distribution             196 000

Administration                        98 000

Answer 1

	Out put	9800 units
	Materila Required	40 Sq m for one unit at 5.3
	Particulars	Amount	Amount
a)	Prime Cost
	Direct Material		2077600
	(9800*40*5.3)
	Direct Labour
	Boarding	1176000
	(9800*48*2.5)
	Finishing	558600	1734600
	(9800*30*1.9)
	Prime Cost		3812200
	(D M + D L)
b)	Variable Production cost
	Variable Over head
	Boarding		352800
	(9800*375000/500000*48)
	Finishing Department		147000
	(9800*150000/300000*30)
	Variable Productin Cost		4312000
c)	Total Production Cost
	Total Variable Cost		4312000
	Fixed Production cost		392000
	Total Production Cost		4704000
d)	Total Cost
	Total Production cost		4704000
	Selling and Distribution		196000
	Administration		98000
	Total Cost		4998000