Answered: To produce a unit of product A, 8 kg of…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2PA: Five Card Draw manufactures and sells 24,000 units of Diamonds, which retails for $180, and 27,000...

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Question

Apple Ltd. produces product A. The company uses standard costing.

To produce a unit of product A, 8 kg of raw material are required, the standard cost of which is NIS 10 per kg, and 3 hours of direct labor, which costs NIS 50 per hour.

Indirect costs are charged on the basis of direct labor hours. In March 2015, the company planned to produce 12,000 units of product A.

In practice, the company produced 10,000 units in March.

The production of these units required 75,000 kg of raw material whose cost amounted to NIS 787,500 and 32,000 direct labor hours whose cost was NIS 1,664,000.

What is the material quantity deviation?

30000 for good

There is no correct answer

45000 negative

50000 for good

120000 negative

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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