and also to show how to combine them into an operating statement 2.2 Example: Variances and operating statements Sydney manufactures one product, and the entire product is sold as soon as it is produced. There are no opening or closing inventories and work in progress is negligible. The company operates a standard costing system and analysis of variances is made every month. The standard cost card for the product, a boomerang, is as follows. STANDARD COST CARD - BOOMERANG Direct materials 0.5 kilos at $4 per kilo 2.00 Direct wages 2 hours at $2.00 per hour 4.00 Variable overheads 2 hours at $0.30 per hour 0.60 Fixed overhead 2 hours at $3.70 per hour 7,40 Standard cost 14.00 Standard profit 6.00 Standing selling price 20.00 Selling and administration expenses are not included in the standard cost, and are deducted from profit 25 a period charge. Budgeted (planned) output for the month of June 20X7 vas 5.100 units. Actual results for June 20x7 were as follows. Production of 4,850 units was sold for $95,600. Materials consumed in production amounted to 2.300 kgs at a total cost of $9,800, Labour hours paid for amounted to 8.500 hours at a cost of $16.800. Actual operating hours amounted to 8.000 hours.. Variable overheads amounted to $2,600. Fixed overheads amounted to $42,300. Selling and administration expenses amounted to $18,000. Required Calculate all variances and prepare an operating statement for the month ended 30 June 20x7. 50 BP