Reference no: EM133171772

Question - Mens Cook Ltd operates a large bakery at the Accra Mall. The company employs a standard costing system. The expected production for January 2021 for its flagship large size sponge cake was 150, but in February the figures show a production and sales of 120 large size sponge cakes for January. The actual costs for January were 380 labour hours (at a cost of GHS 8,360); Fixed overhead of GHS 5,000; 1,150 kg of materials (at a cost of GHS 2,875). Only 90% of direct materials were used in production, while 5% of direct labour constituted idle time. As a manager you know the following standards: Materials: 10 kg at GHS 3/kg Labour: 4 hours at GHS 20/hour Fixed overhead: GHS 40/ unit.

Required -

i) Calculate both the price and quantity variances for materials, labour and overhead.

ii) Indicate who you would interview to learn more about the labour variance and state any reason why such person should be interviewed.