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Pelagic Processing Cc uses a standard costing system. The company records revealed that 500 units were budgeted for during the month of September 2020. However,
Pelagic Processing Cc uses a standard costing system. The company records revealed that 500 units were budgeted for during the month of September 2020. However, only 80% of production target was achieved. The companys cost accountant has provided you with the following standard and actual costs per unit for the month of September 2020. Overheads are absorbed on the basis of direct labour hours.
Description | Cost(N$) |
Materials: Standard Actual | 1.5kg @ N$2.50 1.25kg @ N$2.30 |
Direct labour: Standard Actual | 1 hr @ N$12.5/hr 1.5 hr @ N$12/hr |
Variable overhead |
Standard Actual | 1 hr @ N$5.5/hr 1.5 hr @ N$6/hr |
REQUIRED: | Marks | |
From the foregoing information, compute the following variances and briefly discuss the possible cause for each type of variance obtained: | ||
5.1 | Material price variance | 3 |
5.2 | Material quantity variance | 3 |
5.3 | Direct labour rate variance | 3 |
5.4 | Direct labour efficiency variance | 3 |
5.5 | Variable overhead spending variance | 3 |
TOTAL MARKS FOR QUESTION 5 | 15 |
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