Page 256 - BA2 Integrated Workbook - Student 2017

Fundamentals of Management Accounting

CHAPTER 7 – STANDARD COSTING AND VARIANCE ANALYSIS

7.1 The sales price variance for the period was $69,000 adverse

$
46,000 units should sell for (× $34) 1,564,000
But did sell for 1,495,000
––––––––

Sales price variance 69,000 adverse
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7.2 The sales volume contribution variance for the period was $14,000 favourable

Units
Budgeted sales volume 45,000
Actual sales volume 46,000

–––––––
Sales volume variance in units 1,000 favourable
× standard contribution per unit ($34 - $20) $14
Sales volume contribution variance $14,000 favourable

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7.3 B

Wages paid $14,500
Rate variance $1,300 adverse
–––––––
Standard rate for hours worked $13,200

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Standard rate per hour = $13,200/1,000 = $13.20.

7.4 C

An attainable standard is achievable if work is carried out efficiently. An ideal
standard can have a negative motivational impact because it makes no
allowances for unavoidable losses or idle time, etc. A basic standard is out of
date and unrealistic as a basis for monitoring performance. A current standard
is based on current levels of performance and so does not provide any incentive
for extra effort.

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