Question $23|$ Variance Analysis

MACIT Limited manufactured $2,000$ units during November $2023$ of a special irrigation tool used by

farmers in Jamaica. The irrigation tool has the following standard prime cost:

Direct material: $3$ metres $at$ $$500$ per metre..... $$1,500$

Direct labour: $10hrsat$ $$250$ per $hr...........$ $$2\mathrm{.}500$

Standard prime cost per unit $.....................$ $$4,000$

The actual results for MACIT Limited's special irrigation tool were as follows:

Direct material purchased

Direct material used

Direct labour

$6,300$ metres at $$520$ per metre

$5,000$ metres

$23,200hrs$ at $$225$ per hr$.$

Task $23$A Compute the Direct Material Variances for:

$[4\mathrm{.}5$ Marks$]$

i$.$ Price $[2$ marks$]$

ii$.$ Usage $[2\mathrm{.}5$ marks$]$

Task $23$B

Compute the Direct Labour Variances for:

$[4\mathrm{.}5$ Marks$]$

iii. Rate $[2$ marks$]$

iv$.$ Efficiency $[2\mathrm{.}5$ marks$]$

Task $23$C

$[1$ mark$]$

List two reasons why companies adopt standard costing.