Explain the two (2) reasons for the price and quantity standards are determined separately? The Dearborn Company

Explain the two (2) reasons for the price and quantity standards are determined separately?

 

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The Dearborn Company manufactures product X in standard batches of 100 units. A standard cost system is in use. The standard costs for a batch are as follows: Direct materials Direct labour Variable overhead 60kg x RM 4.50 per kg 36 hours x RM 8.25 per hour 36 hours x RM 4.75 per hour Standard output per month 24,000 units Production for April 2021 amounted to 210 batches. The relevant statistics follows: Raw materials used Cost of raw materials used Direct labour cost Variable overhead Actual hours worked 13,000 kg RM 61,100 RM 66,924 RM 36,000 7,920 RM 270 297 171 738 The management has noted that actual costs per batch deviate somewhat from standard costs per batch. The Dearborn Company manufactures product X in standard batches of 100 units. A standard cost system is in use. The standard costs for a batch are as follows: Direct materials Direct labour Variable overhead 60kg x RM 4.50 per kg 36 hours x RM 8.25 per hour 36 hours x RM 4.75 per hour Standard output per month 24,000 units Production for April 2021 amounted to 210 batches. The relevant statistics follows: Raw materials used Cost of raw materials used Direct labour cost Variable overhead Actual hours worked 13,000 kg RM 61,100 RM 66,924 RM 36,000 7,920 RM 270 297 171 738 The management has noted that actual costs per batch deviate somewhat from standard costs per batch.

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The reasons for determining price and quantity standards one by one are as follows 1 Pricing Decisions Determining fee requirements one by one lets in ... View the full answer