ii. Component sets price and usage variance

iii. Labour rate and efficiency variance

iv. Variable production expenditure and efficiency variance

v. Fixed production expenditure and volume variance

vi. Administration and selling variable expenditure variance

vii. Administration and selling fixed expenditure variance

viii. Sales price and volume variance

b. Provide two possible reasons for the wood and labour variances. (4 marks)

QUESTION 2 [25 MARKS Sweet Home Namibia (SHN) builds standard wooden homes in Namibia for central and local government organisations as well as private landowners. SHN purchases wood and sets of components from a number of suppliers and employs semi-skilled labour to build the homes. A set of component includes all the plumbing electrical equipment and cupboards to complete one home. SHN's budgeted and actual results for the year ended 30 June 2020 are as follows: Actual Budget Number of homes completed sold (units) 1 100 1000 NS 000 NS"000 Sales 24 970 22 500 Wood (Budget 50 m per home)Actual cost was N$90 m) 5 148 4 400 Component sets (Budget is 1 set per home)(Used 1105 sets) 7735 6600 Semi-skilled labour (variable) (note 2) 3630 3072 Variable production overheads (note 3) 1887.6 1 548,8 Fixed production overheads (note 3) 2 362.4 2 251.2 Administration and selling costs (note 4) 808 700 Profit 3399 3.928 Notes: 1. There was no opening or closing inventory on hand. 2. SHN budgeted 128 labour hours to start and complete a home. SHN pays labourers at the normal labour rate per hour if they take more than 128 hours to complete a home. The actual labour hours per completed home for 2020 were 132 hours. 3. SHN uses a standard absorption costing system. Variable and fixed production overheads are absorbed / allocated to each home per labour hour worked. 4. 40% of the budgeted administration and selling costs are fixed. Actual foced administration and selling costs amounted to N$300 000 You are required to: a. Calculate two variances for income earned and two variances for each item of production and non-production cost (Show all your workings). In other words calculate the following variances (21 marks) Wood price and usage variances