Question MA2.41: Standard cost and revenue details for product C are as follo...
Data for questions 41 to 49
Standard cost and revenue details for product C are as follows.
£ per unit
Selling price 90.50
Direct material 12 kg at £1.70 per kg 20.40
Direct labour 3 hours at £14 per hour 42.00
Variable overhead 12.00
Budgeted sales and production for June were 47,200 units. However a machine breakdown occurred and as a result labour were idle for 150 hours and actual sales and production were 45,600 units.
Other actual data for June are as follows.
£
Sales revenue 4,058,400
Direct material cost for 539,800 kg purchased and used 944,650
Direct labour cost for 134,100 hours, including 150 idle hours 1,850,580
Variable overhead cost 542,800
Question 41
The sales price variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 42
The sales volume contribution variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 43
The materials price variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 44
The materials usage variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 45
The idle time variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 46
The labour rate variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 47
The labour efficiency variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 48
The variable overhead expenditure variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Question 49
The variable overhead efficiency variance for June is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
adverse \square
favourable \square
Solution 41
The sales price variance for June is £68,400 adverse.
Workings:
£
45,600 units should sell for ( × £90.50) 4,126,800
But did sell for 4,058,400
68,400 adverse
Solution 42
The sales volume contribution variance for June is £25,760 adverse
Workings:
Actual sales volume 45,600 units
Budget sales volume 47,200 units
Sales volume variance in units 1,600 units adverse
× standard contribution per unit ×£16.10
£25,760 adverse
Solution 43
The materials price variance for June is £26,990 adverse
Workings:
£
539,800 kg should cost (× £1.70) 917,660
but did cost 944,650
26,990 adverse
Solution 44
The materials usage variance for June is £12,580 favourable
Workings:
45,600 units produced should use ( × 12 kg) 547,200 kg
But did use 539,800 kg
Variance in kg 7,400 kg favourable
× standard price per kg ×£1.70
£12,580 favourable
Solution 45
The idle time variance for June is £2,100 adverse
Workings:
Idle time variance = 150 hours idle × £14 standard labour cost per hour = £2,100 adverse
Solution 46
The labour rate variance for June is £26,820 favourable
Workings:
£
134,100 hours should cost (× £14) 1,877,400
but did cost 1,850,580
26,820 favourable
Solution 47
The labour efficiency variance for June is £39,900 favourable
Workings:
45,600 units produced should take ( × 3 hours) 136,800 hours
But did take (active hours) 133,950 hours
Variance in hours 2,850 hours favourable
× standard rate per hour ×£14
£39,900 favourable
Solution 48
The variable overhead expenditure variance for June is £7,000 adverse
Workings:
£
133,950 active hours should cost (× £4) 535,800
but did cost 542,800
7,000 adverse
Solution 49
The variable overhead efficiency variance for June is £11,400 favourable
Workings:
Efficiency variance in hours from labour variance 2,850 hours favourable
× standard rate per hour × £4
£11,400 favourable