Reference no: EM132530524

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

Question (a) Calculate price and usage variances for each material.

Question (b) Calculate labour rate and efficiency variances.

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