The budgeted selling price and standard cost of a unit manufactured by Smillie Limited is as follows:
Question:
The budgeted selling price and standard cost of a unit manufactured by Smillie Limited is as follows:
£
Selling price ...............30
Direct materials (2.5 kilos) .......... 5
Direct labour (2 hours) ...........12
Fixed production overhead .......... 8
25
Budgeted profit ............. 5
Total budgeted sales: 400 units
During the period to 31 December 2012, the actual sales and production details for Smillie were as follows:
£
Sales (420 units) ............13440
Direct materials (1260 kilos) ........ 2268
Direct labour (800 hours) ........ 5200
Fixed production overhead ........ 3300
10768
Profit ................ 2672
Required:
(a) Prepare a standard cost operating statement for the period to 31 December 2012 incorporating as many variances as the data permit.
(b) Explain what the statement tells the managers of Smillie Limited.
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