Intermediate: Calculation of actual quantities working backwards from variances. The following profit reconciliation statement summarizes the performance of one of SEWs products for March.

The budget for the same period contained the following data:

Additional information:
e stocks of raw materials and finished goods are valued at standard cost;
e during the month the actual number of units produced was 1550;
e the actual sales revenue was £12000;
e the direct materials purchased were 1000kg.
Required:

(a) Calculate (i) the actual sales volume;
(ii) the actual quantity of materials used;
(ii) the actual direct material cost;

(iv) the actual direct labour hours;
(v) the actual direct labour cost;
(vi) the actual variable overhead cost;
(vii) the actual fixed overhead cost. (19 marks)

(b) Explain the possible causes of the direct materials usage variance, direct labour rate variance and sales volume variance. : (6 marks)
CIMA Operational Cost Accounting Stage 2

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Budgeted profit () 4250 850A Sales volume variance Standard profit on actual sales Selling price variance 3400 4000A (600) Adverse Favourable Cost variances: () () Direct material price 1000 Direct material usage 150 Direct labour rate 200 Direct labour efficiency 150 Variable overhead expenditure 600 Variable overhead efficiency 75 Fixed overhead efficiency 2500 Fixed overhead volume 150 Actual profit 1175 3650 2475F 1875