Question #$2(20$ marks$)$

A company operates using a standard marginal costing system and manufactures one product and management is trying to assess its operations. Standard revenue and cost data is provided for Cinco.

Selling price

Direct material A Direct material B

Direct labour

$$48\mathrm{.}00$

$2\mathrm{.}5$ kg at $$6\mathrm{.}80$ per kg

$1\mathrm{.}5$ kg at $$4\mathrm{.}80$ per kg

$0\mathrm{.}45$ hrs$.$ at $$24\mathrm{.}00$ per hour

Actual data for the twelve$-$month period was as follows:

Sales and production $48,000$ units of the blaster were produced and sold for $$2,323,200$

Direct material A

$121,950$ kg were used at a cost of $$804,870$

Direct material B

$67,200$ kg were used at a cost of $$336,000$

Direct labour

Employees worked for $18,900$ hours, but $19,200$ hours were paid at a cost of $$468,480$

Budgeted sales for the period were $50,000$ units of Product Blaster. A recession last year meant that the market for the product declined by $10\%.$

Required:

$($a$)$ Calculate the following variances. i Sales volume variance.

$(2$ marks$)$

$($ii$)$ Planning and operational variances for sales volume.