Question 1

Standard Costing

Rich Brand presents the following data about the operations for the year ended 30 June 2019

DESCRIPTION ACTUAL BUDGET

Material cost 20 000 30 000

Labour cost 40 000 38 000

Overhead cost 60 000 42 000

Total cost 120 000 110 000

Units produced 140 000 160 000

The company estimated to consume 60 000kg of raw materials but 56 000kg was actually consumed. The company estimated to pay labour at 2.00 per hour but 2.50 per hour was actually paid

Required:

Calculate the following:

1.1 Material cost variance

1.2 Material price variance

1.3 Material usage variance

1.4 Labour cost variance

1.5 Labour rate variance

1.6 Labour efficiency variance