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4 marksStandard Costing and Variance Analysis

CAPE Accounting Unit 2 · 2004 · Paper 2 · Question 3(a)(iv)

Amor Inc. produces jewelry using electroplating. Standard cost sheet per unit and actual operational results for producing 70,000 units are provided.

Compute the fixed overhead spending and volume variances.

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Other parts of this question

  1. 3(a)(i)Compute the price and efficiency variances for direct materials.[4 marks]
  2. 3(a)(ii)Compute the price and efficiency variances for direct labour.[4 marks]
  3. 3(a)(iii)Compute the variable overhead spending and efficiency variances.[4 marks]
  4. 3(b)(i)Prepare a schedule of expected cash flows.[8 marks]
  5. 3(b)(ii)Calculate the Net Present Value (NPV) of the closed-loop system.[6 marks]
  6. 3(b)(iii)State, with reason, whether the company should invest in the system.[1 mark]
  7. 3(b)(iv)Identify TWO non-financial factors that the company should consider in deciding whether to invest.[4 marks]

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