Variance Analysis for Chairs

A branded chairs manufacturing company has specified the following standard material and labour quantities and costs for one unit of chair KB-15. Material 1.85 kgs at Rs. 350 per kg Labour 0.4 hour at Rs. 120 per hour. During January, the procurement manager finalized a deal for purchase of raw material needed for the product KB-15 and bought 100,000 kilo grams of material at Rs. 315 per Kg. In January, the company produced 48,000 units of the chair involving the following material and labour usage:- Material 95,000 kg Labour 220 hours at Rs. 121 per hour Required : a. Compute the standard quantity of material and labour time for the month of January for the production. b. Determine the material price and material quantity variance. c. Calculate the labour rate and labour efficiency variance for January. d. Evaluate whether the procurement manager finalized a good deal for acquisition of material. e. Evaluate critically all variances.