Tutorial 11 Past Exam Question The Mowlem Company uses a standard costing system. The standard cost specification for one unit of output is set out below: $30 12 2 Direct Materials (15kg@ $2/kg) (10 mins Fixed Variable $12 per hour) Direct Labour: Overhead The Company's flexible budget for manufacturing overhead at a budgeted capacity of 22,800 units, totaled $410,400. This consisted of $342,000 of budgeted fixed overhead, and $68,400 of budgeted variable overhead. The company allocates overhead based on direct labour hours Actual Cost and production data for 21,500 units produced in the month were as follow ActuaQuantity Quantity Actual Cost PricePurchased Inputs $2.20/kg400,000kg 325,000kg Material A Material B Direct Labour Fixed Mfg $3.90/kg60,000kg 60,000kg $44,165 3,650 hours $344,600 Indirect Materials & Indirect Labour (all variable Other Variable Mfg Overhead $15,487 $51,905 The company records all variances as early as possible Required: (a) Calculate the following Variances (i) Price and quantity (efficiency) variances for Material A and Material B (ii) Labour Rate(Price) and Efficiency Variances (ii) All Variable Overhead and Fixed Overhead Variances (iv) The Flexible Budget Variance for manufacturing costs (b) Briefly comment on the results of your analysis, whether management should investigate any or all of the variances and if so, provide one possible cause of any significant variance (c) Prepare the journal entries to record (i) the price and efficiency variances for Material A (ii) the overhead costs incurred, allocated and the overhead variances