Brighton Stokes Ltd operates a standard costing system, which provides the company with cost information that is vital to its budget preparation each period. One of the products produced by the company is Work Right. At the end of September 2016, the following information was extracted from the companys records:

Standard cost per unit

$

Direct raw materials 20 litres at $40 each 800

Direct labour 3 hours at $150 each 450

Total 1,250

Actual results for the month:

Opening stock direct raw materials 20,000 litres

Production 5,000 units

Direct raw materials purchased was 90,000 litres valued at $3,420,000

Closing stock of direct raw materials 8,000 litres

Direct labour 15,200 hours at a cost of $2,219,200.

Required:

1. Calculate the direct raw materials price variance. (4 marks)
2. What was the direct raw material usage variance for the month? (4 marks)
3. Determine the difference between the budgeted labour cost and the amount that was actually paid for June 2016. (4 marks)
4. Calculate the direct labour efficiency variance. (4 marks)
5. Explain the concept of standard costing (4 marks)

Brighton Stokes Ltd operates a standard costing system, which provides the company with cost information that is vital to its budget preparation each period. One of the products produced by the company is Work Right. At the end of September 2016, the following information was extracted from the companys records:

Standard cost per unit

$

Direct raw materials 20 litres at $40 each 800

Direct labour 3 hours at $150 each 450

Total 1,250

Actual results for the month:

Opening stock direct raw materials 20,000 litres

Production 5,000 units

Direct raw materials purchased was 90,000 litres valued at $3,420,000

Closing stock of direct raw materials 8,000 litres

Direct labour 15,200 hours at a cost of $2,219,200.

Required:

1. Calculate the direct raw materials price variance. (4 marks)
2. What was the direct raw material usage variance for the month? (4 marks)
3. Determine the difference between the budgeted labour cost and the amount that was actually paid for June 2016. (4 marks)
4. Calculate the direct labour efficiency variance. (4 marks)
5. Explain the concept of standard costing (4 marks)

Brighton Stokes Ltd operates a standard costing system, which provides the company with cost information that is vital to its budget preparation each period. One of the products produced by the company is Work Right. At the end of September 2016, the following information was extracted from the companys records:

Standard cost per unit

$

Direct raw materials 20 litres at $40 each 800

Direct labour 3 hours at $150 each 450

Total 1,250

Actual results for the month:

Opening stock direct raw materials 20,000 litres

Production 5,000 units

Direct raw materials purchased was 90,000 litres valued at $3,420,000

Closing stock of direct raw materials 8,000 litres

Direct labour 15,200 hours at a cost of $2,219,200.

Required:

1. Calculate the direct raw materials price variance. (4 marks)
2. What was the direct raw material usage variance for the month? (4 marks)
3. Determine the difference between the budgeted labour cost and the amount that was actually paid for June 2016. (4 marks)
4. Calculate the direct labour efficiency variance. (4 marks)
5. Explain the concept of standard costing (4 marks)