Page 12 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Chapter 1

Now create the standard cost card:

$
Direct materials 3 kg × $5/kg 15

Direct labour 1/3 of an hour × $24 per hour 8
Variable overheads 1/3 of an hour × $6 per hour 2

Fixed production overheads 10
––––
Total absorption cost 35

––––

The total closing inventory = opening inventory + actual production –
actual sales

= 3,000 + 21,000 – 18,000 = 6,000 units

The value of closing inventory = 6,000 units × $35 per unit = $210,000

Illustrations and further practice

Now try example 1 from Chapter 1.

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