Chang Limited manufactures one item of kitchen furniture known as Excon. The following standard cost data is available for one unit of Excon.

During March 2015, the budgeted production was 240 units. 

The actual data for March 2015 was as follows.

Required

a. Calculate the following variances for March 2015: 

i. Direct material price variance 

ii. Direct material usage variance 

iii. Direct labour rate variance 

iv. Direct labour efficiency variance. 

b. Prepare a statement reconciling the standard cost of production with the actual cost of production. 

c. Comment on the possible reasons for the variances calculated in parts (i)-(iv).

d. State four advantages of using a system of standard costing.

Transcribed Image Text:

Direct materials metres O S6.25 per metre Direct labour 3.5 hours @ $8 per hour