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Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg) 400 700 ? Material cost ($) 8,000 See purchases ?

Original Budget

Actual

Flexible Budget

Units Produced (in units)

10,000

12,000

?

Materials used (kg)

400

700

?

Material cost ($)

8,000

See purchases

?

Direct Labour (hours)

35,000

46,102

?

Direct Labour ($)

385,000

507,080

?

Variable Overhead ($)

350,000

419,161

?

Fixed Overhead ($)

160,000

161,000

?

Other Information

Overhead is Allocated on Direct Labour Hours

During the year, 800 kg of materials were purchased for $5,000

Beginning Inventory: none

Ending Inventory: 100kg

Required:

Calculate the flexible budget amounts for all items.

Calculate the following variances

  1. Material Rate
  2. Material Efficiency
  3. Labour Price
  4. Labour Efficiency
  5. Variable Overhaed Rate
  6. Variable Overhead Efficiency
  7. Fixed Overhead Rate
  8. Fixed Overhead Production Volume
  9. Assume that the Material, Labour and Variable Overhead variances are inter-related. What is the most likely single cause of these variances. Briefly explain your answer.

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