In: Accounting
Alexandria Company uses a standard costing system. At the beginning of the 2020 financial year Alexandria adopted the following standards:
Inputs |
Total |
|
Direct materials |
3 kg @ $2.50 per kg |
$7.50 |
Direct labour |
5 hrs @ $7.50 per hr |
37.50 |
Factory overhead: |
||
Variable |
$3.00 per direct labour hour |
15.00 |
Fixed |
$4.00 per direct labour hour |
20.00 |
Standard cost per unit |
$80.00 |
Alexandria’s July 2019 budget was based on the denominator volume of 40,000 direct labour hours. Alexandria’s actual July production was 7,800 units. The records for July indicated the following:
Direct materials purchased |
25,000kg @ $2.60/kg |
Direct materials used |
23,100kg |
Direct labour |
40,100 hours at $7.30/hour |
Total actual factory overhead: Variable $125,000 Fixed $175,000 |
$300,000 |
The company’s policy is to record materials variances at the time materials are purchased.
Required