Brain Co produces and sells one product only,the Blob,the standard cost for one unit being as follows.
Question:
Brain Co produces and sells one product only,the Blob,the standard cost for one unit being as follows.
$ | |
Direct material A----10 kgs at $20 per kg | 200 |
Direct material B----5 litres at $6 per litre | 30 |
Direct wages----5 hours at $6 per hour | 30 |
Fixed production overhead | 50 |
Total standard cost | 310 |
The fixed overhead included in the standard cost is based on an expected monthly output of 900 units.
Fixed production overhead is absorbed on the basis of direct labour hours.
During April the actual results were as follows.
Production | 800 units |
Material A | 7,800 kg used,costing $159,900 |
Material B | 4,300 litres used,costing $23,650 |
Direct wages | 4,200 hours worked for $24,150 |
Fixed production overhead | $47,000 |
Required
(a)Calculate price and usage variances for each material.
(b)Calculate labour rate and efficiency variances.
(c)Calculate fixed production overhead expenditure and volume variances and then subdivide the volume variance.
(d) Discuss the potential relationships between price variance and usage variance by using an example.
Expert Answer:
Calculate price and usage variances for each material The direct material price variance Material A 7800 kgs of A should have costed 780020 156000 But ... View the full answer
