Question
Question 1 (Total 50 marks) Mendis Ltd. manufactures a single product - the Inui, a heat massager. Annual budgeted production and sales is 23,000 units.
Question 1 (Total 50 marks)
Mendis Ltd. manufactures a single product - the Inui, a heat massager. Annual budgeted production and sales is 23,000 units.
The following standard variable costs per unit have been estimated:
| |
Direct Material (9 Kg @ 4/Kg) | 36.00 |
Direct Labour (3 hours @ 8/hour) | 24.00 |
Standard variable cost per unit | 60.00 |
You are also told the following information |
Estimated selling price = 85 per unit |
Budgeted fixed production overhead for the year amounted to 330,000. |
The company operates a standard marginal costing system. |
The actual results for the year were as follows: |
Production & sales (units) : 20,000 |
Direct materials: 176,000 kg @ 4.2 per kg |
Direct labour: 64,000 @ 8.3 per hour |
Fixed production overhead = 297,000 |
The 20,000 units sold generated revenue totalling 1,760,000. |
|
Your assistant has started to calculate some of the variances and has told you that the Sales Volume Variance is 75,000 adverse, while the Labour Rate Variance is 19,200 adverse, |
REQUIRED:
a) Calculate the following variances for the year: (18 marks)
I) Material Price
II) Material Usage
III) Labour Efficiency
IV) Sales Price
V) Overhead Expenditure
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