The Managing Director of Kaseh Ltd does not understand why there are differences between the standard and the actual costs and has tasked you as a Management consultant to undertake a variance analysis to investigate the differences recorded for the year under review.Note: Computations are required to support your analysisRequired:Write a report to the Managing Director, highlighting all the possible variances in Material, Labour, Variable Overheads and Sales and their possible causes.

QUESTION 6 Kaseh Ltd produces and sells one product with the brand name Kontoh. The standard cost for one unit being as follows: GHS 6 |Page Direct material A - 11 kilograms at GHS20 per kg 220 Direct material B - 5.5 litres at GHS10 per litre 55 Direct wages - 5 hours at GHS7 per hour 35 Variable production overhead 50 Total standard cost 360 The variable production Overheads is incurred in direct proportion to the direct labour hours worked. The budgeted sales volume for the month of May was 850 units at Standard price of GHS380 Actual results for the month of May are as follows: Production and Sales 900 units Material A 9,000 kg used, costing GHS 189,000 Material B 4,500 litres used, costing GHS 40,500 Direct wages 5,400 hours worked for GHS 35,100 Variable production overhead GHS 48,600 Sales proceeds GHS328,500