(a) A company manufactures a food product, data for which for one week have been analysed as follows:

(b) In analysing variances, it is found frequently that an adverse variance from one standard is related directly to a favourable variance from another.
Give two examples of such a situation and comment briefly on each.

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Standard cost data: Direct materials: 10 units at .150 Direct wages: 5 hours at 4.00 Production overhead: 5 hours at 5.00 Other overhead may be ignored. Profit margin is 20% of sales price. Budgeted sales are 30,000 per week. Actual data: 3 222 15 20 25 60 Sales 29,880 Direct materials 6,435 Direct wages 8,162 Analysis of variances: Adverse Favourable Direct materials: price 585 usage 375 Direct labour: rate 318 efficiency 180 Production overhead: expenditure 200 volume 375