1. K K Anderson Ltd. manufacture gearboxes for use in cars. At the start of the year, the management of Anderson Ltd. estimated that its costs would be: This was based on the following: .. . You have recently been employed by the company to establish a standard costing system. At the end of the year you were able to extract the following information: Direct labour Direct material Variable production overhead Fixed production overhead Administration overhead A. % of sales value 60825 labour costs 4.40/hour 32 000 units sold 210/unit selling price 160 000 hours were worked 12 80 employees 2000 hours worked by each employee 40 000 gearboxes manufactured in the year as budgeted production 200 unit selling price. variable production overheads were 640 000 fixed production overheads were 810 000 administration costs were 350 000 raw material prices were 10% higher than expected total expenditure on raw material was 3.696 M there were no opening or closing stocks of raw materials. Variable overheads Standard cost = Actual cost = Expenditure variance = Efficiency variance = (Add expenditure and efficiency variances to 'Operating Statement for the Year' on the final sheet of the calculations.) Fixed overheads Expenditure variance = Volume variance = (Add these variances to 'Operating Statement for the Year' on the final sheet of the calculations.) Admin overhead (treat as fixed) Expenditure variance = Volume variance = (Add these variances to 'Operating Statement for the Year' on the final sheet of the calculations.)