March Inc. produces and sells one product.The budgeted (standard) cost for one unit follows:

Budgeted Cost per unit of output

Direct materials 5 kg @ $1.50 per kg

Direct Labour 4 hrs @ $15.00 per hour

Factory overhead (allocated based on direct labour hours)

Variable 4 hrs @ $5.00 per hour

Normal activity per month 8,000 direct labour hours

The actual data for the current month is:

Units produced and sold 1,800 units

Direct materials purchased 10,200 kg @ $1.48 per kg

Direct materials used 9,500 kg

Direct labour costs for the month $122,100

Direct labour pay rate $16.50 per hour

Actual hours 7,400 hours

Total variable overhead costs $26,000

REQUIRED:

Calculate the following variances. You must correctly identify the amount of the variances and if they are F (favorable) or U (unfavorable).

(18 marks)

1. Static Budget Variance
2. Flexible Budget Variance
3. Sales Volume Variance
4. Direct material rate variance
5. Direct material efficiency variance
6. Direct labour rate variance
7. Direct labour efficiency variance
8. Variable overhead rate variance
9. Variable overhead efficiency variance

Answer rating: 100% (QA)

To calculate the variances we will compare the actual results with the budgeted standard costs Here are the calculations for each of the variances 1 Static Budget Variance This variance measures the d... View the full answer