QUESTION 2

Answer the questions from the information provided.

1. 1. Use the information provided below to calculate and comment on the following variances.
      1. Direct material price variance (2 marks)
2. 2. Direct material usage variance (3 marks)
3. 3. Labour rate variance (3 marks)

INFORMATION

The standard costing system is in operation at Project Max. The standards and actual information for April 2021 for the only product that is manufactured are as follows:

Standards
Direct materials	5 metres @ R10 per metre
Direct labour	4 hours @ R60 per hour
Variable overheads	R15 per labour hour
Normal production	10 000 units per month

Actual information for April 2021:
Direct materials used	44 000 metres @ R8.80 per metre
Direct labour	37 000 hours @ R58 per hour
Variable overheads	R576 000
Production	9 000 units manufactured

FORMAT:

2.1.1

Direct material price variance

=

=

=

Comment:

(2 marks)

2.1.2

Direct material usage variance

=

=

=

Comment:

(3 marks)

2.1.3

Direct labour rate variance

=

=

=

Comment:

(3 marks)

PLEASE ANSWER IN FULL USING THE TABLES ABOVE