In: Accounting
Material cost 5kgs shs.50
Labour cost 20hours shs.10
Material consumed in producing 500 units was Shs.25,650 against 2,700kgs of material. Wages paid was Sh6,050 for 11,600 hours, including 20 hours which was idle time due to machine breakdown.
Required:
a. | Material cost variance = | 1,350 - 2,000 | ||
= | 650 | U | ||
b. | Material price variance = | (Actual price – Standard price) x Actual quantity purchased | ||
= | (9.5 - 10) X 2,700 | |||
= | 1,350 | F | ||
c. | Material usage variance = | (Actual qty – Standard qty allowed) x Standard price | ||
= | (2,700 - 2,500) x 10 | |||
= | 2,000.00 | U | ||
d. | Labour cost variance = | 250 + 790 + 10 | ||
= | 1,050 | U | ||
e. | Labour rate variance = | (Actual rate – Standard rate) x Actual hours worked | ||
= | 6,050 - 0.50 x 11,600 | |||
= | 250 | U | ||
f | Labour efficiency variance = | (Actual DL hours – Standard DL hours) x Standard DL rate per hour | ||
= | (11,580 - 10,000) x 0.50 | |||
= | 790 | U | ||
h | Idle Time Variance = | Abnormal Idle Time x Standard Rate | ||
= | 20 x 0.50 | |||
= | 10 | U | ||
Working | ||||
Actual price per unit = | 25,650 / 2,700 kgs | |||
= | 9.5 | |||
Standard price per unit = | 50 / 5 kgs | |||
= | 10 | |||
Actual labor rate per hour = | 6,050 / 11,600 | |||
0.52155 | ||||
Standard labor rate per hour = | 10 / 20 hours | |||
0.5 |