Reference no: EM133064403
Question - Batu Ltd operates in Windhoek, manufacturing sandals. The company uses a standard costing system, with a plan to produce 10,000 pairs of sandals each month this year. The following standard costs apply:
Account Amount per pair N$
Selling Price per unit 60
Leather (200 MM) 6
Labour (0.5 hours) 15
Variable overheads (Based on materials) 5
The company also budgets for fixed overheads of N$50,000 per month, absorbed by labour hours.
The following are the company's actual results for May 2021:
Number of pairs manufactured 10,000
Leather Purchased (2,500 metres) 80,000
Direct Labour (4,850 hours) 94,575
Variable overheads 45,000
Fixed overheads 46,000
Additional Information
1. There was no inventory at the beginning of the month.
2. An analysis of the production records shows that only 2,050 meters of Leather were issued to production.
3. Batu Ltd uses the absorption costing method to present their financial information.
4. The company recorded sales of all 10,000 units, at a total of N$650,000
Required - Calculate the labour price variance.
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