Max manufactures a single product called Barta.

REQUIRED

a) Explain what is meant by attainable standards and ideal standards.(5 marks)

Additional information

The standard costs for the month of September were:

Per Unit

Direct material 10 litres at Rs2per litre Rs20

Direct labour 4 hrs at Rs8 per hr Rs32

Fixed production overhead 4hrs at Rs4 per hr Rs16

Budgeted production for the month of September was 19 000 units

Actual data for the month of September was:

Direct material 166 200 litres costing Rs365 640

Direct labour 75 000 hrs at Rs562 500

Fixed production costs Rs230 000

Actual production for the month of September was 17 500 units. There was no opening orclosing inventories.

REQUIRED

b) Calculate the following variances for the month of September:

i. Material price

ii. Material usage

iii. Labour rate

iv. Labour efficiency

v. Fixed overhead efficiency(15 marks)

c) Briefly explain the causes of the material and labour variances calculated in (b).(10 marks)