Quelpr
2 marksStandard Costing and Variance Analysis

CAPE Accounting Unit 2 · 2009 · Paper 2 · Question 3(b)(ii)

Belize Laboratories Incorporated (BLI) produces Right Lube with given standard cost details. Data for purchases, material usage, labour hours, overhead, and production for November 2008 are provided.

Materials were purchased from a new supplier seeking a long-term purchase contract. Recommend whether the company should sign the contract, supporting your response with an appropriate explanation.

This question uses a figure or table from the paper — you'll see it when you practise.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 3(a)(i)Calculate the total standard cost of materials (including packaging) for a pair of bookends.[7 marks]
  2. 3(a)(ii)List two parties that would typically participate in the development of material standards.[2 marks]
  3. 3(a)(iii)For any one of the parties listed in (a)(ii), indicate their role in the development of material standards.[1 mark]
  4. 3(b)(i)Compute the price and efficiency variances of the materials used in the production of Right Lube.[5 marks]
  5. 3(b)(iii)Compute the rate and efficiency variances for direct labour employed in the production of Right Lube.[6 marks]
  6. 3(b)(iv)During November, the labour mix was changed from 20 senior technicians and 15 assistants to 15 senior technicians and 20 assistants to save costs. Recommend…[2 marks]
  7. 3(c)(i)Calculate the current contribution margin per box of gourmet chocolate.[1 mark]
  8. 3(c)(ii)Compute the current break-even point, in dollars, before the cost increase.[3 marks]
  9. 3(c)(iii)Compute the company's expected net income for next year.[4 marks]
  10. 3(c)(iv)Assuming the cost of chocolate increases by 20 percent, calculate the new selling price required to maintain the current contribution margin rate.[2 marks]

More practice: the rest of this paper · more Standard Costing and Variance Analysis questions · all CAPE Accounting Unit 2 past papers