Question

Springfield Ltd. manufactures a single product. In April 2020, the following information was

available:

Standard Costs

Direct material (5 kgs at 6 per kg): 30

Direct labour (2 hours at 10.5 per hour): 21

The standard output (production): 1,000 units

Actual costs for May 2020

Output (Production): 1,200 units

Direct materials: 5,500 kgs at 6.50 per kg

Direct labour: 2,500 hours at a total cost of 25,000

Requirements:

(a) Calculate the material price variance giving possible reasons.

(b) Calculate the material usage variance giving possible reasons.

(c) Calculate total sales variance, sales price variance and sales volume variance.