The standard costs of producing the antidote to the vanishing potion described earlier
(in Chapter 10) were as follows, with the actual costs shown alongside:
| Standard | Actual | |
| Number of bottles produced per batch | 1,000 | 1,000 |
| Direct materials per batch: | ||
| Ingredient A – quantity | 10 kg | 9 kg |
| Ingredient A – price | £80 per kg | £82 per kg |
| Ingredient B – quantity | 5 kg | 5 kg |
| Ingredient B – price | £60 per kg | £59 per kg |
| Ingredient C – quantity | 14 kg | 13 kg |
| Ingredient C – price | £40 per kg | £40 per kg |
| Bottles (price per bottle) | £1 | £1 |
| Bottles used (note that 100 bottles were broken during actual production) |
£1,000 | £1,000 |
| Direct labour per batch: | ||
| Mixing hours | 10 | 11 |
| Mixing pay rate per hour | £4.50 | £4.60 |
| Liquidising hours | 12 | 11 |
| Liquidising pay rate per hour | £4.75 | £5 |
| Bottling hours | 10 | 11 |
| Bottling pay rate per hour | £5 | £5 |
| Other variable overheads | Nil | Nil |
| Total fixed overheads (absorbed on a total direct labour hour basis) |
£1,390 | £1,500 |
(a) Calculate, in as much detail as possible, the standard cost variances for direct labour,
direct materials and fixed overheads.
(b) Write a brief report regarding the variance analysis.
