RU Limited operates a system of standard costing in respect of one its products which is

manufactured within a single cost centre.

The standard price of material is N$20 per litre. The standard wage rate is N$ 12 per hour and 5

hours are allowed to produce on unit Fixed production overhead is absorbed at the rate of 100%

of wages cost.

During the month of September 2020 the following took place:

N$

Actual price (paid for materials purchased) 19.50 per litre

Total direct wages cost 156 000

Fixed production overhead 158 000

Variances

N$

Type Favour (F) Unfavourable (U)

Direct material price 80 000

Direct material usage 5 000

Direct labour rate 5 760

Direct labour efficiency 2 760

Fixed production overhead expenditure 8 000

REQUIRED Marks

2.1 Budgeted output in units 2

2.2 Raw material purchased in litres 4

2.3 What is the standard quantity allowed for production? 4

2.4 Actual units produced 4

2.5 Actual hours worked 4

2.6 Actual Wage rate per hour