Stanley & Co. manufactures door frames from a bought-in wooden moulding. The budget for one door frame
Question:
Stanley & Co. manufactures door frames from a bought-in wooden moulding. The budget for one door frame has costs of £20 for materials and £6 for labour. Each frame has a standard usage of 5 metres of wooden moulding at a standard price of £4.00 per metre. Each frame has a standard time of 0.50 hours and the standard rate of pay is £12.00 per hour. The budget for April was for 2,200 frames with a material cost of £44,000 and a labour cost of £13,200. However, 2,100 frames were actually produced in April, taking 1,000 hours to make at a total labour cost of £13,000. Also, 11,550 metres of wooden moulding were used at a total cost of £43,890.
Tasks:
1. Calculate the cost, quantity and price variances for materials and labour in April.
2. Suggest possible reasons for these variances.
3. If 50 of the 1,000 hours paid were during a power cut which prevented work continuing, what changes would you make to your answers to tasks 1 and 2?
Step by Step Answer:
Managerial Accounting Decision Making and Performance Management
ISBN: 978-0273764489
4th edition
Authors: Ray Proctor