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Variances Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg) 400 700 ? Material cost ($) 8,000 See purchases
Variances
|
| Original Budget | Actual | Flexible Budget |
| Units Produced (in units) | 10,000 | 12,000 | ? |
| Materials used (kg) | 400 | 700 | ? |
| Material cost ($) | 8,000 | See purchases | ? |
| Direct Labour (hours) | 35,000 | 46,102 | ? |
| Direct Labour ($) | 385,000 | 507,080 | ? |
| Variable Overhead ($) | 350,000 | 419,161 | ? |
| Fixed Overhead ($) | 160,000 | 161,000 | ? |
Other Information
Overhead is Allocated on Direct Labour Hours
During the year, 800 kg of materials were purchased for $5,000
Beginning Inventory: none
Ending Inventory: 100kg
Required:
Calculate the flexible budget amounts for all items.
Calculate the following variances
- Material Rate
- Material Efficiency
- Labour Price
- Labour Efficiency
- Variable Overhaed Rate
- Variable Overhead Efficiency
- Fixed Overhead Rate
- Fixed Overhead Production Volume
- Assume that the Material, Labour and Variable Overhead variances are inter-related. What is the most likely single cause of these variances. Briefly explain your answer.
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