Reference no: EM133088175

Question - The standard cost information for Dulcet Limited is given below $

Direct materials 5 kgs at $29.00 per kg 145.00

Direct labour 12 hours at $73.50 per hour 882.00

Variable overheads 12 hours at $25.00 per hour 300.00

Fixed overheads 12 hours at $33.00 per hour 396.00 1,723.00

The budgeted output is 60,000 units. Overheads are absorbed on the basis of direct labour hours.

The actual results are outlined below:

The actual output is 65,000 units

Direct materials 330,000 kgs costing $8,250,000

Direct labour 890,000 hours costing $62,300,000

Variable overheads 890,000 hours costing $17,800,000

Fixed overheads 890,000 hours costing $26,700,000

Required -

(a) Compute the following variances:

(i) Direct material usage

(ii) Direct material price

(iii) Direct labour efficiency

(iv) Direct labour rate

(v) Variable overhead efficiency

(vi) Variable overhead spending

(vii) Fixed overhead volume

(viii) Fixed overhead spending

(b) What are ideal standards and what are currently attainable standards? Of these two standards which is adopted by most companies and why?

(c) Explain how variances are used to evaluate managers performance.