QUESTION $3$

You have recently been appointed by eThekwini Plastic products $($Pty$)$ LTD $("$eThekwiri

Plastios'$)$ as a Management Acoourtant, eThekwini Plastics manufactures a special type of

hard plastic chicken drinkers $("$Rock drinkers"$)$ which are popular in the Poultry industry. The

company is situated in $100$ Umgenl Road, Durban. Currently, the product is doing very well

In the market and the market share is expected to Increase substantialy in $2004.$ To control

conversion costs of its product, the production manager has implemented standard costing

as a control measure to Improve operational efficlencles.

The production manager provides you with the following information for the first quarter of

the $2024$ financlal period.

The production department has set a standard of $4$ kllograms of raw plastic materlal

to manufacture one unit of Rock drinkers.

The existing contract price with the plastic suppller is set at R$10$ per kllogram. The

plastic material price is expected to be constant for the full financlal year.

The cost figures for the first quarter of showed that $5000kg$ of raw plastic materlal

was purchased at R$15$ per kg$.$

$1000$ units of Rock drinkers were produced using $4,500kg$ of raw plastic material.

To produce one Rock drinker, a standard quantity of $5$ direct labour hours at a

standard rate of R$15$ per hour is allowed.

The wage records show that it took $5,000$ hours at R$20$ per hour to produce $1000$

units of Rock drinkers.

REQUIRED:

The production manager would Ike in respect of material and labour, to assist him to

calculate the following varlances for control purposes: