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Princess Ltd manufactures boxes of chocolates. The standard cost card for 1 box of chocolates based on budgeted sales of 1,000,000 boxes is as follows:
Princess Ltd manufactures boxes of chocolates. The standard cost card for 1 box of chocolates based on budgeted sales of 1,000,000 boxes is as follows: Item Description Direct material chocolate 50g at 1 per kg Direct material - caramel 200g at 5 per kg Direct labour 0.5 hours at 8 per hour Fixed overheads 3 per labour hour Total cost Selling price f 0.05 1.00 4.00 1.50 6.55 7.95 Actual costs of sales of 1,200,000 boxes: Item Description Direct material - chocolate 66,000kg Direct material - caramel 270,000kg Direct labour 400,000 hours Fixed overheads Total cost 99,000 1,417,500 3,500,000 1,800,000 6,816,500 Selling price (per box) 8.45 Required: a) Calculate the following variances: Sales price variance Sales volume variance Materials price variances Materials usage variances Labour rate variance Labour efficiency variance Fixed overhead expenditure variance b) Suggest possible reasons for three of the variances you calculated in part a)
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