Question

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

Answer 1

Answer-:

(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...........