Comprehensive variance analysis. (30-40 minutes) AKEI is an lite desk manufacturer. At the start of May 2000,

Comprehensive variance analysis. (30-40 minutes) AKEI is an élite desk manufacturer. At the start of May 2000, the following budgeted unit amounts (based on a standard costing system) related to its manufacture of executive desks (made out of oak): nju7

REQUIRED 1. Prepare a detailed flexible-budget variance analysis for May 2000 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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Direct materials: 16 square metres of oak per desk at SKr 200 per square metre Direct manufacturing labour: 3 hours per desk at SKr 300 per direct manufacturing labour hour Budgeted production for May 2000 was 700 executive desks. There were no opening stocks of direct materials or finished goods on 1 May 2000. Work in progress is minimal. Actual results for May 2000 are as follows: Direct materials purchased (12,640 square metres) SKr 2,591,200 Direct materials used (11,850 square metres)? Direct manufacturing labour (2,325 hours at SKr 310.00 per hour)? Actual production in May 2000 is 750 executive desk units. The purchase price for oak wood remained unchanged throughout May 2000.