Pitt Mills Ltd. uses a standard costing system. August data has just been released and variances are
Question:
Pitt Mills Ltd. uses a standard costing system. August data has just been released and variances are required for the production report. Standard costing for good unit of output:
Direct labour cost per hour $15.00
Materials, board feet per unit 50
Cost per board foot $ 0.50
Direct labour hours (DLH) per unit 3
Variable overhead applied per DLH $ 1.25
Fixed overhead applied per DLH $ 0.50
Budgeted for the Month of August Production volume for August in units 1,000
Sales volume for August in units 1,200
Selling price per unit $90.00
Actual results for the Month of August:
Units produced 1,200
Sales in units 1,300
Sales, at average of $85.00 per unit $93,500
Total variable costs (for income purposes) $76,650
Total fixed costs (for income purposes) $ 5,400
Required: Provide the total static budget variance, total flexible budget variance and the total sales volume variance.