Day: July 25, 2023

The cost of sales of Alex ltd comprises of direct materials and direct labour.

At the end of a trading period the following variances are calculated.

• direct materials price variance – £1,400 FAV
• direct materials usage variance – £900 ADV
• direct labour efficiency variance – £500 FAV
• direct labour rate variance – £1,200 ADV

If the actual cost of sales was £18 500, what was the standard cost of sales?

Select ONE answer:

1. £18,100
2. £18,300
3. £18,500
4. £18,700

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – £18,500 + £1,400 – £900 + £500 – £1,200
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.