XY is a clothing company that is very well established in the industry. They have a garment that is made from higher silk threads, a very expensive material. The standard unit cost for this product was therefore $160.50, including 5.5 square metres of material at a cost of $24 per square metre, and the workers needed 3 man hours to complete it at a wage of $9.50 per hour.

As of 31 March 20X3 has ended, the company has limited production to 1,800 units (a 10% reduction compared to planned production). The loss of staff is not a bad thing as there will be lower cost labour to replace them. This has been very helpful in the procurement of raw materials. The company has now achieved a saving of $21,660. If we can maintain this performance again in the next quarter, then these savings can be used to fund the refurbishment and improvement of the meeting rooms, which we expect to cost around $40,000:

Required:

1) The company purchased 10,800 square metres of material during the quarter and workers also worked 4,950 man-hours? 

2) Calculate the total direct material variance and the total direct labour variance, as well as their respective sub-variances?

Transcribed Image Text:

Report for the quarter to 31 March 20X3 Budget Actual Difference Units 2,000 1,800 200 Material cost ($) Labour cost ($) Total ($) 264,000 57,000 45,540 253,800 10,200 11,460 321,000 299,340 21,660 Report for the quarter to 31 March 20X3 Budget Actual Difference Units 2,000 1,800 200 Material cost ($) Labour cost ($) Total ($) 264,000 57,000 45,540 253,800 10,200 11,460 321,000 299,340 21,660

Answer rating: 100% (QA)

1Total square metres of material required for planned production 2000 units 55 square metres per uni... View the full answer