Standard costing

the Bartlesville plant of harmon company produces an industrial chemical, at the beginning of the year the Bartlesville plant had the following standard cost sheet: Direct materials (5kg@R40) R200 Direct labor (1.4 hrs @ R105) R147 Fixed overhead (1.4 hrs @ R300) R42 Variable overhead (1.4 hrs @ R60) R84 total R473

During the year, Bartlesville plant experienced the following activity relative to the production of the chemical:

1. Units produced 25 000 2. A total of 130 000 kg of direct materials was purchased at R37 per kg 3. There were 10 000 kg of direct materials in beginning inventory (carried at R40 per kg) there was no ending inventory of direct materials 4. The plant used 36500 direct labour hours at a total cost of R3923750 5. Actual fixed overhead totaled R950 000 6. Actual variable overhead totaled 2100 000

Normal activity is 22500 units per annum. Standard overhead rates are calculated based on normal activity measured in standard direct labour hours. Bartlesville plant uses a standard absorption costing system

Required: 2.1 calculate the direct materials price and usage variance. 2.2 calculate the direct labor rate and efficiency variance. 2.3 calculate the overhead variance 2.4 close of all variance to the cost of goods sold account.. 2 5 based on the direct materials variance and the direct labour variance calculate above would you recommend that Bartlesville plant continue to use this chapter direct Material? Why?