ICI Limited follows a standard marginal costing system. It is involved in production of number of products information relating to product X, which is made in one of the company departments is given below:

Product X

Standard Marginal

Product Cost per unit

Direct Material (6 Kg @ Rs.4 per Kg)

24

Direct Labour (1 hour @ Rs.7 per hour

7

Variable production overhead

3

Total cost per unit

34

Budgeted fixed factory overhead per month Rs.100,000. Variable production overhead varies with units produced. Budgeted production for product X is 20,000 units per month. Actual production and costs for the month are as follows:

Units of X product produced

18,500

Direct Material purchases and used (113,500 Kg)

Rs. 442,650

Direct Labour (17,800 Hours)

129,940

Variable overhead incurred

58,800

Fixed Production overhead incurred

104,000

Total

735,390

Required:

1. Prepare following budgets in column statement showing of costs:(Marks 9)
2. Original Budget
3. Flexible budget
4. Actual
5. Calculate Direct Material and Direct Labour variances.(Marks 6) (Total Marks 15)