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A) Pan and Cook Ltd operates a large bakery at the AnC shopping center. The company employs a standard costing system. The expected production for
A) Pan and Cook Ltd operates a large bakery at the AnC shopping center. The company employs a standard costing system. The expected production for January 2021 for its flagship large size sponge cake was 150, but in February the figures show a production and sales of 120 large size sponge cakes for January. The actual costs for January were 380 labour hours (at a cost of GHS 8,360); Fixed overhead of GHS 5,000; 1,150 kg of materials (at a cost of GHS 2,875). Only 90% of direct materials were used in production, while 5% of direct labour constituted idle time. As a manager you know the following standards: Materials: 10 kg at GHS 3/kg Labour: 4 hours at GHS 20/hour Fixed overhead: GHS 40/ unit Required: Calculate both the price and quantity variances for materials, labour and overhead. i). [18 marks] ii). Indicate who you would interview to learn more about the labour variance and state any two (2) reasons why such person should be interviewed [4 marks]
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