Fidget Ltd is a manufacturing company and maintains a fixed budget for planning purposes. Below is a budget of production costs and actual result observed for month of July 2019.

Budget Actual

Units Produced 5,000 5,500

Costs: sh sh

Direct Materials 20,000 22,764

Direct Labour 60,000 75,900

Variable Production Overhead 14,000 14,950

Fixed Production Overhead 10,000 9,000

Depreciation 4,000 4,000

In Preparing The Fixed Budget,the following standards were adopted:

1

Direct Material 10kg Of Materials Per Unit Produced.

Direct Labour 2 Hours Per Unit Produced.

Variable production overhead cost rate per direct labour hour was calculated.

Fixed production overhead cost rate per unit was calculated.

DepreciationStraight-line method is used for all assets.

Required

Focusing on the budgeted and actual value of the various items,determine whether adverse of favourable variances were obtained(justify the answer given).

(12marks)