V Limited operates a standard costing system and a system of budgetary control. The budgeted information and standard costs for March 2020 were as follows.

Budgeted output	2500 units
Budgeted fixed overheads	$48000
Standard cost per unit
Direct materials $24	(3 kilos at $8 each)
Direct labor $64	(4 hours at $16 each)

V Limited uses labor hours to absorb fixed overheads.

The actual results for March 2020 were as follows.

Output	2400 units
Fixed overheads	$49800
Direct materials cost	$68340
Direct materials usage	8040 kilos
Direct labor costs	$156864
Direct labor hours	9120 hours

Required: (a) (i) Calculate the direct materials price and quantity variance. (4 mark) (ii) State the 2 reasons for each of the direct materials variance. (2 marks)

(b) (i) Calculate the direct labor rate and efficiency variance. (4 marks) (ii) State the 2 reasons for each of the direct labor variance. (2 marks)

(c) (i) Calculate the fixed overheads expenditure variance. (2 marks) (ii) Calculate the fixed overheads volume variance. (2 marks)

Answer rating: 100% (QA)

1 direct meterial price variance SPAPAQ DMPV 885 68340 DMPV 34170 Direc... View the full answer