MM has prepared the following standard cost information for one unit of a product: Production 12 000 units Direct materials: 3 metres at K12 000 per metre Direct labour: 6 hours at K6 250 per hour Fixed Production overheads: 6 hours at K5 500 per hour Actual results in the month of May 2012 were recorded as follows: Actual output: 10 000 units Direct materials purchased and used: 32 000 metres with a total value of K377 600 000 Direct labour: 70 000 hours with a total cost of K422 800 000 Fixed overheads: K330 000 000 Required: (a) Use the budget data to determine the standard cost of one unit. (b) Calculate the following variances. (i) Material usage and Price variances. (ii) Labour Efficiency and Rate variances. (iii) Fixed overhead Expenditure and Volume variances. (c) Draw up a statement reconciling the standard cost with the actual cost.
MM has prepared the following
Production 12 000 units
Direct materials: 3 metres at K12 000 per metre
Direct labour: 6 hours at K6 250 per hour
Fixed Production
Actual results in the month of May 2012 were recorded as follows:
Actual output: 10 000 units
Direct materials purchased and used: 32 000 metres with a total value of K377 600 000
Direct labour: 70 000 hours with a total cost of K422 800 000
Fixed overheads: K330 000 000
Required:
(a) Use the budget data to determine the standard cost of one unit.
(b) Calculate the following variances.
(i) Material usage and Price variances.
(ii) Labour Efficiency and Rate variances.
(iii) Fixed overhead Expenditure and Volume variances.
(c) Draw up a statement reconciling the standard cost with the actual cost.
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