AKEI is an elite desk manufacturer. At the start of May 2015, the following budgeted unit amounts

Question:

AKEI is an elite desk manufacturer. At the start of May 2015, the following budgeted unit amounts (based on a standard costing system) related to its manufacture of executive desks (made out of oak):
Direct materials: 16 square metres of oak per desk at €20 per square metre Direct manufacturing labour: 3 hours per desk at €30 per direct manufacturing labour-hour
Budgeted production for May 2015 was 700 executive desks. There were no opening of direct materials or finished goods on 1 May 2015. Work in progress is minimal.
Actual results for May 2015 are as follows:
Direct materials purchased (12 640 square metres) €259......................120
Direct materials used (11 850 square metres)......................................?
Direct manufacturing labour (2325 hours at €31 per hour)......................?
Actual production in May 2015 is 750 executive desk units. The purchase price for oak wood remained unchanged throughout May 2015.
Required
1. Prepare a detailed flexible-budget variance analysis for May 2015 covering direct materials and direct manufacturing labour.
2. Give two explanations for each of the variances you calculate in requirement 1.
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