Reference no: EM13547381

Compute and interpret price and usage variances for material, labour, and overhead inputs

Scenario

5K Ltd. makes and sells a single product "JAY" standard costs relating to "JAY" have been calculated as follows:

                                                                                                               Per unit($)

 

Direct material: X : 4 Kg at $12 per kg Direct labour, 5 Hours at $7 per hour Variable production Overhead, 5 Hours at $2 per hour Fixed production Overhead 5 hours at $10 per hour	48.00 35.00 10.00 50.00 143.00

Overhead is absorbed into production on the basis of standard hours of production and budaeted volume of production is 20.000 units.

The budgeted selling price of LAN is $150.

For the period under consideration the actual results were :

18,000 units were produced out of which 17,000 were sold for $2,618,000. Relevant details of production are as follows:

Materials 76,000 Kg's costing $ 836,000 Labour 84,000 hours were paid $604,800 Variable production overhead was $172,000 Fixed production overhead was $1,030,000

Using the above data:

Compute and Interpret price and usage variances for material, labour, overhead (fixed and variable) and sales.