A company manufactures a single product L, for which the standard material cost is as follows.
$ per unit
Material 14 kg x $3 42
During July, 800 units of L were manufactured, 12,000 kg of material were purchased for $33,600, of which 11,500 kg were issued to production.
SM Co values all inventory at standard cost.
What are the material price and usage variances for July?
Since inventories are valued at standard cost, the material price variance is based on the materials purchased.
$
12,000 kg material purchased should cost (x$3) 36,000
but did cost 33,600
Material price variance 2,400(F)
800 units manufactured should use (x 14 kg) 11,200 kg
but did use 11,500kg
Usage variance in kg 300kg(A)
x standard price per kg x$3
Usage variance in $900 (A)
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A company uses a standard absorption costing system. Last month budgeted production was 8,000 units and the standard fixed production overhead cost was $15 per unit. Actual production last month was 8,500 units and the actual fixed production overhead cost was $17 per unit.What was the total adverse fixed production overhead variance for last month?
A cost centre had an overhead absorption rate of $4.25 per machine hour, based on a budgeted activity level of 12,400 machine hours.In the period covered by the budget, actual machine hours worked were 2% more than the budgeted hours and the actual overhead expenditure incurred in the cost centre was $56,389.What was the total over or under absorption of overheads in the cost centre for the period?
Which of the following would help to explain a favourable direct labour efficiency variance?
(i) Employees were of a lower skill level than specified in the standard
(ii) Better quality material was easier to process
(iii) Suggestions for improved working methods were implemented during the period
Which of the following statements is correct?
The following information relates to labour costs for the past month:
Budget Labour rate $10 per hour
Production time 15,000 hours
Time per unit 3 hours
Production units 5,000 units
Actual Wages paid $176,000
Production 5,500 units
Total hours worked 14,000 hours
There was no idle time.
What were the labour rate and efficiency variances?
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