STANDARD COSTING 25 MARKS ABC (Pty) Ltd is a manufacturer of beds. It uses a standard absorption costing system to monitor performance of managers and departments. A standard absorption cost card for one of its models, the Dreamer, is given below.

$ $ Selling price 25000 Production costs Direct material: 12 metres at $150 per metre 1800 Direct labour: 4 hours at $600 per hour 2400 Variable overhead: 4 hours at $1500 per hour 6000 Fixed overhead: 4 hours at $1000 per hour 4000

14200 Gross profit $10800

Budgeted production and sales are 1,000 Dreamers per month.

Actual results for the manufacture and sale of Dreamers for the most recent month were as follows: Sales: 1,200 beds at $240 each. Production: 1,300 beds Direct material (purchased and used): 16,000 meters at $140 per meter Direct labour (worked and paid): 5,000 hours at $600 per hour Variable overhead $75, 500 Fixed overheads $54, 600.

There were no opening stocks of finished goods. Required: (a) Calculate the following variances for the most recent month (i) Direct material price; (2 marks) (ii) Direct material usage; (2 marks) (iii) Direct labour rate; (2 marks) (iv) Direct labour efficiency; (2 marks) (v) Variable overhead expenditure; (2 marks) (vi) Variable overhead efficiency; (2 marks) (vii) Fixed overhead expenditure; (3 marks) (viii)Fixed overhead capacity; (2 marks)

(ix) Fixed overhead efficiency; (2 marks)