Calculate price and usage variances for each material

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Reference no: EM13920357

A company produces and sells one product only, the Thing, 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 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.

Reference no: EM13920357

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