Questions:

1. What are the material quantity and material price variances?
2. What are the labour quantity and labour price variances?
3. What are the overhead quantity and overhead price variances?
4. Why might two of these variances occur? Select two variances to explain?
5. What are two benefits of variance analysis?

Actual Results Production Static Budget Financials 20,000,000 Per unit 20.00 Sales 19,000,000 Cost of Goods Sold Material - Variable Labour - Variable Factory Overhead COGS 1,000,000 200,000 200,000 Price 4.00 35.00 25.00 Quantity 1,000,000 200,000 4,000,000 - 7,000,000 - 5,000,000 - 15,000,000 Quantity 950,000 210,000 Price 4.50 37.50 20.71 4275,000 7,875,000 4,349,500 16,499,500 200,000 210,000 Gross Profit Seling-Fived Admin - Fived Operating Profit (0) Taxes (%of EBT) Net Income 4,000,000 - 1,000,000 - 1,500,000 1,500,000 500,000 1,000,000 2,500,500 1,000,000 1,500,000 500 167 334 Notes *Labour hours ** Factory overhead allocated by labour hours Budget Overhead Actual factory Overhead Applied Factory Overhead 5,000,000 = ($25 X 200,000 - 4,349,500 Rounded ($20.71 X 210,000) - 5,250,000 = ($25 X 210,000