Elbo Ltd makes roof tiles. It has two production departments: moulding and packing. It makes two different sizes of tile, the Handi and the Jiant. The following table shows the standard costs of labour per pallet of tiles (one pallet contains 144 tiles):

During October, 400 pallets of Handis, and 150 pallets of Jiants were actually produced and the following labour hours and costs were incurred:

Tasks:
For the month of October:
1.  Create the labour budget (hours and £) for (a) Handis, and (b) Jiants.
2.  Calculate the budgeted direct labour cost of one pallet of Handis and one pallet of Jiants.
3.  Calculate the budgeted total labour cost of each department and of the whole factory.
4.  Calculate the direct labour cost variance for each department and for the factory.
5.  For each department and labour type, analyse the cost variances into their rate and efficiency variances.
6.  Comment on your findings.

Transcribed Image Text:

Labour type Standard production hours per pallet Handi Standard hourly rate Department Jiant Moulding Moulding 4 5.00 4.00 5 2 3 Packing Packing 5.00 4.50 Moulding department Actual hours Packing department Actual hours worked Labour type Actual pay (£) Actual pay (£) worked 2,600 695 1,250 12,480 3,336 5,875 3,180 Totals 12,720 25,200 1,945 5,780 9,211