The following profit reconciliation statement summarizes the performance of one of SEWs products for March.............................................................(?)Budgeted profit........... ....................4 250Sales volume variance.......................850 AStandard profit on actual sales........3 400Selling price variance.......................4 000 A........................................................ ..(600)

The budget for the same period contained the following data:

Additional information:? Stocks of raw materials and finished goods are valued at standard cost;? During the month the actual number of units produced was 1550;? The actual sales revenue was ?12 000;? The direct materials purchased were 1000kg.

Required:(a) Calculate(i) The actual sales volume;(ii) The actual quantity of materials used;

(iii) 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.(b) Explain the possible causes of the direct materials usage variance, direct labour rate variance and sales volume variance.

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Adverse Favourable Cost variances: (£) (£) Direct material price 1000 Direct material usage 150 Direct labour rate 200 Direct labour efficiency 150 600 Variable overhead expenditure Variable overhead efficiency Fixed overhead efficiency 75 2500 Fixed overhead volume 150 Actual profit 1175 3650 2475F 1875 Sales volume 1500 units Sales revenue £20000 Production volume 1500 units Direct materials purchased 750kg 750kg Direct materials used Direct material cost £4500 Direct labour hours 1125 Direct labour cost £4500 Variable overhead cost £2250 Fixed overhead cost £4500