Coledale Ltd manufactures and sells product CC. The company operates a standard marginal costing system. The standard cost card for CC includes the following: 

Required

1. Calculate the total variances for direct material, direct labour and variable production overheads. 

2. Provide an appropriate breakdown of the total variance for direct labour calculated in 1. 

3. Suggest TWO possible causes for EACH variance calculated in 2.

Transcribed Image Text:

£ per unit Direct material 20 Direct labour (6 hours at £7.50 per hour) Variable production overheads 45 27 92 The budgeted and actual activity levels for the last quarter were as follows: Budget units Actual units Sales 20 000 19 000 Production 20 000 21 000 The actual costs incurred last quarter were: Direct material Direct labour (124 950 hours) Variable production overheads 417 900 949 620 565 740