Standard Costing & Variance Analysis Delic plc. is a manufacturer of cakes that makes a wide range of cakes. It operates a standard marginal cost accounting system. Given below, is information relating to one of its products, i.e. birthday cakes, which are made in one of the company departments: - Birthday cakes Standard marginal product cost per unit ($) Direct material (6 kgs at $4 per kg) 24 Direct labour (1 hour at $7 per hour) 7 Variable production overhead 3 34 Additional information - Variable production overhead varies with direct labour hours of input - Budgeted fixed production overhead per month is $100,000 - Budgeted production for birthday cakes is 20,000 units per month Actual production and costs for one of the months were as follows: - Units of birthday cakes produced 18,500 units ($) Direct materials purchased and used, 113,500kg 442,650 Direct labour, 17,800 hours 129,940 Variable production overhead incurred 58,800 Fixed production overhead incurred 104,000 735,390 ICLBAT/JANUARY2019 5 Required: (a) Prepare a statement showing, by cost elements (i.e. direct materials; direct labour; variable overhead; and fixed overhead), the: (i) original budget (2 marks) (ii) flexed budget (2 marks) (iii) actual cost (1 mark) (iv) total variances (3 marks) (b) To be more informative for managerial purposes, prepare the following variances: (i) Material price variance (2 marks) (ii) Material usage variance (2 marks) (iii) Wage rate variance (2 marks) (iv) Labour efficiency variance (2 marks) (v) Variable overhead expenditure variance (2 marks) (vi) Variable overhead efficiency variance (2 marks) (Total: 20 marks)