Reference no: EM132585978
Based on the information provided by the company's management, we will calculate the variations in materials, labor and indirect cost.
The company uses a standard cost system. Standard prime costs per unit include three units of materials at a standard price of $ 38 and one-half hour of direct labor at the standard rate of $ 20.
Information to calculate variations is provided below:
Of materials Of labor Indirect cost
Budgeted Hours 30,000
Worked hours of labor 19,320
Budgeted production 60,000
Actual production 52,000
Materials purchased at a rate of $ 32.5 per unit $ 640,000
Used materials $ 325,800
Fixed real indirect cost (IC) $ 78,100
Total actual indirect cost (IC) $ 368,200
Budgeted Variable Indirect Cost (IC) $ 290,000
Budgeted Fixed Indirect Cost (IC) $ 80,000
Question 1: What is the budget variation made of? Define in your words each of its elements.