United Gulf Pipe Manufacturing Co. LLC is the leading pipe manufacturer in Oman. The company established a standard costing system to control the costs. The standard material and labour requirements for one of its product is as under : The company uses three materials X, Y and Z to produce the finished product. It requires 35 Kgs of X, 25 Kgs of Y and 40 Kgs of Z to produce ten units of finished products. The standard purchase price per Kg of the material X, Y and Z is RO 10, RO 16 and RO 12 respectively. The company has appointed three categories of labour to produce the products. Four men, four women and two boys together require 0.25 hours to produce one unit. The standard labour rate per hour amounts to RO 30, RO 20 and RO 15 for men, women and boys respectively. The labour force worked is expected to work for 200 hours during the month. The variable overheads are charged at the standard rate of RO 40 per skilled labour hour. The budgeted Fixed Overheads for a month amount to RO 32,000 and are charged based on the standard/budgeted output.

The Management of United Gulf Pipe Manufacturing Co. LLC believes that the company need to regularly compare the actual costs with standard costs and to analyse whether the costs incurred are under control. For this purpose, the actual cost data for the month of April 2020 provided by the production manager is as under : In the month of April 2020, 750 units were produced. The production department has consumed 2450 Kgs of X costing RO 22,050; 1950 Kgs of Y costing RO 35,100 and 3200 Kgs of Z costing RO 35,200. The labour force worked for 200 hours during the month and the actual group of the labour force included three men, five women and two boys. The prevailing labour market conditions resulted in the change of labour hour per hour to RO 35, RO 25 and RO 15 for men, women and boys respectively. The processing machine broken down for fifteen hours during which the no production was possible. The total actual variable overheads and fixed variable overheads for the month amounted to RO 36,000 and RO 26,250 respectively. The Management of the company appointed you as a consultant to carry out the analysis and submit a report on Variance Analysis of the company for the month of April 2020. The report should include the following : (a) Material Cost Variances (5 Marks) (b) Labour Cost variances (6 Marks) (c) Overhead Variances (4 Marks)