Question $2$

$($a$)$ Explain briefly some of the well$-$known features of standard costing and state the advantages of this costing technique.

$($b$)$ The MD of Muzi $($Pty$)$ Ltd recently attended a seminar on variance analysis. He heard that variable and fixed overhead variances could be analyzed into: $($i$)$ Efficiency variance $($ii$)$ Budget variance $($iii$)$ Idle capacity variance

The following data are available from the records of the company for year $2023$

Budgeted variable overhead costs $($for $8,000$ direct labour hours$)$ E$20,000$

Budgeted fixed overhead costs E$40,000$

Actual hours worked $2,200$ hours

Standard hours $2,000$ hours

Actual variable overhead costs incurred E$5,100$

Actual fixed overheads incurred E$39,800$

Required:

He has requested you to compute these variances from the records of the company and to explain what each variance represents.

'Please answer the question by doing the "required" part, using the given information'