(a) Describe briefly three different types of standard which may be used as the basis for...

 

Transcribed Image Text:

(a) Describe briefly three different types of standard which may be used as the basis for a standard costing system. (6) Two competing companies HERO Ltd. and ZERO Ltd. sell the same type of product in the same market. Their forecasted profit and loss accounts for the year ending December 1990 are as follows: Zero Ltd. Hero Ltd. Sales 5,00,000 5,00,000 Less : Variable Cost of Sales Fixed Costs Forecasted Net Profit before tax Rs. 4,00,000 50,000 4,50,000 50,000 Rs. 3,00,000 1,50,000 4,50,000 50.000 You are required to state which company is likely to earn greater profits in conditions of: (a) low demand and (b) high demand (a) Describe briefly three different types of standard which may be used as the basis for a standard costing system. (6) Two competing companies HERO Ltd. and ZERO Ltd. sell the same type of product in the same market. Their forecasted profit and loss accounts for the year ending December 1990 are as follows: Zero Ltd. Hero Ltd. Sales 5,00,000 5,00,000 Less : Variable Cost of Sales Fixed Costs Forecasted Net Profit before tax Rs. 4,00,000 50,000 4,50,000 50,000 Rs. 3,00,000 1,50,000 4,50,000 50.000 You are required to state which company is likely to earn greater profits in conditions of: (a) low demand and (b) high demand

Answer rating: 100% (QA)

Types of standards that are used as a basis for a standard costing system Basic standards costs These standards may remain unchanged for a long period ... View the full answer