Sanguinary Services carries out blood tests for local hospitals, surgeries and doctors. The standard cost card for each blood test is given below.

The centre has fixed overheads of £72,000 per annum and plans to carry out 36,000 blood tests every year at the rate of 3,000 tests per month.

In April, the following results were recorded:

Required

(a) Calculate the profit that the centre expected to make in April, based on the original forecast of 3,000 blood tests in the month.

(b) Calculate the following, stating whether each variance is favourable or unfavourable:

• Sales volume variance

• Sales price variance

• Direct material total variance

• Direct material price variance

• Direct material usage variance

• Direct labour total variance

• Direct labour rate variance

• Direct labour efficiency variance

• Fixed overhead expenditure variance

(c) Prepare a statement reconciling the expected profit to the actual profit for April.

Transcribed Image Text:

Chemicals used in blood tests: 10 millilitres at 50 pence/ml Laboratory worker: 15 minutes at £16 per hour Fixed overhead of the testing centre Total cost Charge for each blood test Standard profit per blood test 4 5.00 4.00 2.00 11.00 15.00 4.00