A company produces and sells one product only, the Thing, the standard cost for one unit being as follows.
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$
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Direct material A - 10 kilograms at $20 per kg
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200
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Direct material B - 5 litres at $6 per litre
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30
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Direct wages - 5 hours at $6 per hour
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30
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Fixed production overhead
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50
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|
Total standard cost
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310
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The fixed overhead included in the standard cost is based on an expected monthly output of 900 units. Fixed production overhead is absorbed on the basis of direct labour hours.
During April the actual results were as follows.
Production 800 units
Material A 7,800 kg used, costing $159,900
Material B 4,300 litres used, costing $23,650
Direct wages 4,200 hours worked for $24,150 Fixed production overhead $47,000
Required
(a) Calculate price and usage variances for each material.
(b) Calculate labour rate and efficiency variances.
(c) Calculate fixed production overhead expenditure and volume variances and then subdivide the volume variance.