Reference no: EM132556402
ABC Ltd operates a standard variable costing system. Information relating to one of its products for the month just ended is given below:
Standard variable cost card Per unit (Rs)
Selling price 150
Direct material 5 Kg at Rs. 10 per Kg 50
Direct labor 3 hours at Rs. 10 per hour 30
Variable production overhead 3 hours at Rs. 6.67 per hour 20
(Variable production overhead varies with direct labor hours)
Budgeted fixed production overhead per month is Rs. 250,000
Budgeted production and sales per month is 10,000 units.
Actual results for the month just ended are:
Units 1 1,000
Rs.
Sales 1,595,000
Direct material (58,000 Kg) 568,400
Direct labor (32,000 Hours) 352,000
Variable production overhead 198,000
Fixed production overhead 248,000
Question 1: You are required to calculate the variances below :
(i) Direct material price variance
(ii) Direct material usage variance
(iii) Direct labor rate variance
(iv) Direct labor efficiency variance