ABC (Pty) Ltd is a manufacturer of beds. It uses a standard absorption costing system to monitor

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Question:

ABC (Pty) Ltd is a manufacturer of beds. It uses a standard absorption costing system to monitor performance of managers and departments. A standard absorption cost card for one of its models, the Dreamer, is given below.

$ $
Selling price 250·00
Production costs
Direct material: 12 metres at $1·50 per metre 18·00
Direct labor: 4 hours at $6·00 per hour 24·00
Variable overhead: 4 hours at $15·00 per hour 60·00
Fixed overhead: 4 hours at $10·00 per hour 40·00

142·00
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Gross profit $108·00
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Budgeted production and sales are 1,000 Dreamers per month.

Actual results for the manufacture and sale of Dreamers for the most recent month were as follows:
Sales: 1,200 beds at $240 each.
Production: 1,300 beds
Direct material (purchased and used): 16,000 meters at $1·40 per meter
Direct labour (worked and paid): 5,000 hours at $6·00 per hour
Variable overhead $75, 500
Fixed overheads $54, 600.

There were no opening stocks of finished goods.
Required:
(a) Calculate the following variances for the most recent month
(i) Direct material price;
(ii) Direct material usage;
(iii) Direct labour rate;
(iv) Direct labour efficiency;
(v) Variable overhead expenditure;
(vi) Variable overhead efficiency;
(vii) Fixed overhead expenditure;
(viii)Fixed overhead capacity;

(ix) Fixed overhead efficiency;