Question 1

Firdous Perfume Company makes a special perfume called Heavenly. The standard cost for one bottle of Heavenly is as follows.

Elements	Standard
	Quantity	Price
Direct Material	6 oz.	OMR0.90
Direct Labour	0.5 hrs	OMR 12
Manufacturing Overhead	0.5 hrs	OMR 4.80

During the month, the following transactions occurred in manufacturing 10,000

bottles of Heavenly.

1. 58,000 ounces of materials were purchased at OMR1.00 per ounce.
2. All the materials purchased were used to produce the 10,000 bottles of Allure.
3. 4,900 direct labour hours were worked at a total labour cost of OMR 56,350.
4. Variable manufacturing overhead incurred was $15,000 and fixed overhead incurred was OMR 10,400.

Required

1. Compute the total variance for the three cost elements, and the price and quantity variances for direct materials and direct labour.
2. Compute the total variance for manufacturing overhead.
3. Analyze and interpret variances.