Reference no: EM132565638

ABC Co. had the following master budget for the year 2019-20. If the production level is up to 1,000 units first column will be applicable and if the total production is between 1,001 and 2,000 units, second column will be applicable.

For a total Production level of 1-1000 units 1,001 to 2,000 units

Budgeted sales units 1,200 units

Material cost per kg (1 kg per unit) Rs. 10 Rs. 9

Setup cost Rs. 1,00,000 Rs. 1,50,000

Interest cost @10% of setup costs (allocated)

Administrative costs (allocated arbitrarily by HO) Rs. 50,000

Actual: Sales 800 units.

NO opening or closing inventory.

Material cost Rs. 9,900 for 900 kgs.

Actual Setup cost was Rs. 1,20,000.

Administrative cost on actuals was Rs. 55,000 and interest costs on actuals was Rs. 18,000.

Question 1: Calculate the following variances

1. Material cost variance
2. Material usage variance
3. Flexible budget variance for setup costs
4. Flexible budget variance for interest cost
5. Flexible budget variance for administrative costs
6. Sales volume variance for setup costs
7. Sales volume variance for material costs