Question

# FBC(Pty) manufactures one product, Product X. You were given the following information for period 4. Product...

FBC(Pty) manufactures one product, Product X. You were given the following information for period 4. Product X has a standard material cost as follows. 10kg of material Y at P10 per kg =P100 per unit of X. During period 4, 1000 units of X were manufactured using 11700 kg of material Y which cost P98631. The standard labour cost of product X is as follows, 2 hours of grade Z labour at P10 per hour=P20 per unit of product X. During period 4 , 1000 units of product X were made and the labour of grade Z was P17825 for 2300 hours of work. Calculate the following variances, material price variance, material usage variance, labor rate variance and labor efficiency variance

(a). Material price variance

= (Standard price- actual price) * actual quantity

= [10 - (98631/11700kg)]* 11700 kg

= 18,369 favorable

(b). Material usage variance

= (Standard quantity- actual quantity) * standard price

= (10,000- 11,700)* 10

= 17,000 unfavorable

(c). Labour rate variance

= (Standard rate-actual rate)* actual hours

= [10- (17,825/2300 hours)] * 2300 hours

= (10- 7.75)* 2300 hours

= 5,175 favorable

(d). Labour efficiency variance

= (Standard hours - actual hours)* standard rate

= (2,000 hours - 2,300 hours)* 10

= 3,000 unfavorable

Thankyou...........

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