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Wonder Co. have set following standards to manufacture a product - Particulars Direct material Rs. 7 units of H @ Rs. 30 per unit
Wonder Co. have set following standards to manufacture a product - Particulars Direct material Rs. 7 units of H @ Rs. 30 per unit 210 8 units of J@ Rs. 60 per unit 480 20 units of K@ Rs. 50 per unit 1000 1690 Direct labour 6 hours @Rs.15 per hour Total standard prime cost 90 1780 During the year the company worked 22,500 direct labour hours and produced and sold 4,000 units of the product. The company paid at Rs. 16 per hour for 3,500 hours while for the remaining, the wages were paid at standard rate. Direct material costs were as follows- 30,000 units of H @ Rs.31 per unit 32,000 units of J @ Rs.58 per unit 78,000 units of K @ Rs.50.5 per unit a) Determine the material cost variance, material usage variance and material price variance (12 marks) b) Determine the labour cost variance, labour efficiency variance and labour rate variance (12 marks) c) Explain the concept of material mix variance and why is it calculated? (6 marks)
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