A company manufactures a single product for which the standard variable cost is: K per unit Direct
Question:
A company manufactures a single product for which the standard variable cost is:
K per unit
Direct material: 81 kg x K7 per kg 567
Direct labor: 97 hours x K8 per hour 776
Variable overhead: 97 hours x K3 per hour 291
1,634
Budget
Sales and production volume 81,600 units
Standard selling price K59 per unit
Standard variable cost K24 per unit
During January, 530 units were produced and the costs incurred were as follows:
Direct material: 42,845 kg purchased and used; cost K308,484
Direct labor: 51,380 hours worked; cost K400,764
Variable overhead: cost K156,709
Actual results
Sales and production volume 82,400 units
Actual selling price K57 per unit
Actual variable cost K23 per unit
Required:
(a) Calculate the following variances
- Direct material total variance
- Direct labor rate variance
- Direct labor efficiency variance
- Sales price variance
- Sales volume contribution variance
(b) Discuss the three (3) Performance Levels in Standard Costing
(c) Discuss three (3) criticisms levelled against the appropriateness of Standard Costing in the Modern Environment