A company manufactures two components in one of its factories. Material A is one of several materials used in the manufacture of both components.

The Standard direct labour hours per unit of production and budgeted production quantities for a 13-week period were:

Standard Budgeted

direct labour hours production quantities

Component X 0.40 hours 36,000 units

Component Y 0.56 hours 22,000 units

The standard wage rate for all direct workers was Rs 5.00 per hour. Throughout the 13-week period 53 direct workers were employed, working a standard 40-hour week.

The following actual information for the 13-week period is available:

Production:

Component X 35,000 units

Component y 25,000 units

Direct wages paid Rs 138,500

Material A purchases 47,000 kilos costing Rs 85,110

Material A price variance Rs 430 F

Material A usage (component X) 33,426 kilos

Material A usage variance (component X) Rs 320.32 A

Required:

1. Calculate the direct labour variances for the period.
2. Calculate the standard purchase price for material A for the period and the standard usage of material A per unit of production of component X.
3. Outline the uses of standard costing and discuss the reasons why standards have to be reviewed.