Question 1

SECTION B - MULTI-TASK QUESTION 2 (STANDARD COSTING)

Scenario: AeroDrone Technologies manufactures commercial drones. They use standard marginal costing. The standard cost card for one drone is:
- Direct Materials: 4 units of carbon fiber @ $50/unit = $200
- Direct Labor: 10 hours @ $20/hour = $200
- Standard Contribution per drone = $300

Actual results for the month (1,000 drones produced and sold):
- Materials purchased and used: 4,200 units costing $218,400
- Labor worked: 9,800 hours costing $205,800
- Idle time recorded: 200 hours (included in the 9,800 hours paid)

Based on the scenario, answer the following 5 sub-tasks.

Task 1: Calculate the Direct Material Price Variance.
Task 2: Calculate the Direct Material Usage Variance.
Task 3: Calculate the Direct Labor Rate Variance.
Task 4: Calculate the Direct Labor Efficiency Variance (based on active hours worked).
Task 5: Calculate the Idle Time Variance.

Accepted Answer

Use standard variance formulas. Remember that efficiency variance uses active hours (paid hours - idle hours), while rate variance uses total paid hours.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using total paid hours (9,800) for the efficiency variance instead of active hours (9,600), which would result in a $4,000 Favorable variance instead of $8,000 Favorable.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 5

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