Question

In: Accounting

A company produces and sells one product only, Peperoni, the standard cost for one unit being...

A company produces and sells one product only, Peperoni, the standard cost for one unit being as

Follows.

$

Direct material A – 10 kilograms at $20 per kg                                                                                    200

Direct material B – 5 litres at $6 per litre                                                                                               30

Direct wages – 5 hours at $6 per hour                                                                                                     30

Fixed production overhead                                                                                                                         50

Total standard cost                                                                                                                                          310

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 March 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.                                                              5 Marks

(b) Calculate labour rate and efficiency variances.                                                                             5 Marks

(c) Calculate fixed production overhead expenditure and volume variances and then subdivide the

volume variance.                                                                                                                                             5 Marks

Solutions

Expert Solution

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ekkarill92 answered 2 years ago
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