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ks 1& 2 pending * FNSACC613 05-6.pdf Als/FNSACC613%20Q5-6.pdf Direct Materials: Direct Labour: Factory Overhead: 2 metres @$1
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Answer #1
Answer to question (a)
Standard Quantity Produce 5000 Actual quantity Produced 4800
Standard material rate 1.80/mtr actual marterial rate 1.90/mtr
Standar Qty used for actual productionn 9600 Actual quantity used 9780
Mareial cost Variance (SQ*SP)-(AQ*AP) -1302 Unfavourable
Materal Rate Variance (SR-AR)*AQ -978 Unfavourable
Marerial quantity Variance (SQ-AQ)*SR -324 Unfavourable
Answer to question (b)
Standard Hours for Actual Production 3200 Actual Hours 3300
Standard Rate 12 Actual Rate 12.1
Answer to question (c)
Labour Cost Variance (SH*SR)-(AH*AR) -1530 Unfavourable
Labour Rate Variance (SR-AR)*AH -330 Unfavourable
Labour Efficiency Variance (SH-AH)*SR -1200 Unfavourable
Answer to question (c)
i) Spending variance
Standard Hours for Actual Production 3200 Actual Hours 3300
Budgeted Variable OH for actual Production 6400 Actual Variable OH 6800
Budgeted Fixed OH for actual Production 12800 Actual Fixed OH 13800
Total Budgeted OH for actual hrs. 19200 Total Actual OH 20600
Spending Variance = Actual - Budgeted 1400 Favourable
OH Efficiency Variance (AH-SH)*SR 600 Favourable
Rate Variance (AR-SR)*AH 800 Favourable

Answer to Question (d)

There is unfavourable Material cost and Labor cost variance, where on the other hand favourable overheads. Management needs to cut down its material cost and labor cost to match with standard cost and to keep its margin.

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