Question

Operations Summary - March 2019 units (cases) sold 93,500 kilograms (k) 176,800 kilograms (kg) material purchases material usage 3 51,2 46 s r hours (DLH) S 15.00 /DLH1 00:000 Direct labour cost Variable overhead 1, 50,000 cost driver: DLH 5.00 /DLH Co0 cost driver: DLH 6.50 /DLH Fixed overhead units (cases) sold s 1050,000 $ 15.00/unit 0,000 Sales revenues 343,700 98,200 kilograms (kg) 175,000 kilograms (kg) Direct material purchases Direct material usage WIP (Standard: 2.5 kg/unit) Direct labour cost (Standard: 0.25 DLH / unit) Variable S 3.50 /kg $14.00 /DLH 4.5o /DLH う50,000 direct-labour hours (DLH) cost driver: DLH cost driver: DLH Fixed overhead s 7.00 /DLH Required: (HINT: Complete the chart on this page first) Using the data and answer sheets provided, calculate the variances for each of the following catagories: A) Sales revenues (3 marks) B) Direct materials purchased /used in production (4 marks) C) Direct labor (3 marks) D) Variable overhead (2 marks) E) Fixed Overhead (3 marks)

Answer 1

Actual Figures

	$	PER	QTY
SALES	986000	14.5	68000
DM Purchased	303875	3.25	93500
DM WIP	609960	3.45	176800
D LABOUR	306000	15	20400
VARIABLE O/H	102000	5.0	20400
FIXED O/H	132600	6.5	20400

Budgeted figures

Particulars	$	per	qty
Sales	1050000	15	70000
D Material Purchased	343700	3.5	98200
D Material WIP	612500	3.5	175000
D Labour	245000	14	17500
Variable O/H	78750	4.5	17500
Fixed O/H	122500	7	17500

Variances:

A) Sales:

Sales Price Variance = (14.5-15)*68000= 34000(A)

Sales Margin Volume Variance= (68000-70000)*(1.625)# = 3250(A)

B) Direct Material Purchase Cost Variance =

(68000*(98000/70000)*3.5-303875)= 30,006(F)

Direct Material WIP Cost Variance: (68000*(175000/70000)*3.5)-609960 = 14960(A)

C) Direct Labour Variance:

(68000*0.25*14)-306000= 68000(A)

D) Variable O/H Cost Variance:

(68000*0.25*4.5)-102000= 25500(A)

E) Fixed O/H Variance:

122500 - 132600 = 10100(A)

#Budgeted Contribution per unit: 15 - (175000/70000*3.5)-(0.25*14)-(0.25*4.5)=1.625/-