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AS N er vi goodt i gang uses standard costs in its operating accounts. In production department 1 (T1) all direct materials are added at

AS "NĂ¥ er vi goodt i gang" uses standard costs in its operating accounts. In production department 1 (T1) all direct materials are added at the beginning of the manufacturing process. Direct salary and indirect manufacturing costs accrue evenly throughout the entire manufacturing process in T1.

 

The following standard calculation is available:

Direct materials 
Number of kilos6.0 kg
Price per kilokr 20.00
Direct salary 
Number of hours1 hour
Salary per hourkr 120
Indirect manufacturing costs120 kr per hour
Standard fare T1Kr 380

The following activity was registered in the month of December:

Incoming balance goods in work300 pieces
These were80% fully manufactured
Finished production in the period2 500 pieces
Closing Balance goods in work 600 pieces
Disse var40% fully manufactured

 

The following cost information was recorded for T1 in the month of December:

Direct salarykr 367 354
Direct labor hours2 587 hours
Material consumption in kg16 020 kg
Material costkr 312 390

QUESTION : Calculate the material variance, the price variance and the quantity variance. Discuss what the reasons for the individual deviations may be.

Standard material cost 
Actual material cost 
Total deviation 

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