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Calculate the total cost and direct material variances

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Reference no: EM13878758

Omega PLC manufactures a product for which the standard cost data are as follows:

 

Units of input

Cost per input unit (£)

Cost per unit of output (£)

Direct materials

3 kg

5

15

Direct labour

2 hours

4

8

Variable overhead

2 hours

2

4

Fixed overhead

2 hours

10

20

Standard cost

47

The budget for the month of April was set at an output of 5000 units and a total cost of £235,000.

The actual output and costs for the month of April were as follows:

Actual output

4800 units

Actual costs (£)

Direct materials (14,480 kg)

73,656

Direct labour (9700 DIH)

38,800

Variable overhead

18,960

Fixed overhead

99,000

Total costs

£230,416

(a) Calculate the following variances and associated subvariances for April: total cost; Direct material; Direct labour; Variable overhead; Fixed overhead.

(b) Interpret the information provided by the fixed overhead variances in this case.

Reference no: EM13878758

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