A company has a budgeted material cost of $125,000 for the production of 25,000 units per month. Each unit is budgeted to use 2 kg of material. The standard cost of material is $2.50 per kg.Actual materials in the month cost $136,000 for 27,000 units and 53,000 kg were purchased and used.

Number of units produced                2,200                 2,000 

                                                         Budget               Actual 

                                                            $                          $

Direct materials                              110,000             110,000

Direct labour                                  286,000              280,000

Variable overhead                        132,000              120,000

The actual number of units produced was 2,000.