ACCA Applied Knowledge · Management Accounting · Standard costing system
A company sets its standard cost card for Product Z at 4 kg of material at $5 per kg, 2 hours of labour at $12 per hour, and variable overhead of $3 per labour hour. What is the standard variable cost of one unit of Product Z?
The standard variable cost per unit is $50. Material costs $20 (4 kg at $5), labour costs $24 (2 hours at $12) and variable overhead costs $6 (2 hours at $3), and these three elements added together give the total standard cost.
- A$44Correct
- B$50
- C$47
- D$38
Explanation
Material 4 x $5 = $20; labour 2 x $12 = $24; variable overhead 2 x $3 = $6. Total = $50. Check: 20+24+6=50, so the correct option is $50. Note the option order: the $44 option omits the overhead rate on hours and equals 20+24 only.
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