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BBB Ltd. is involved in a manufacturing business, it uses standard costing to...

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Accounting

BBB Ltd. is involved in a manufacturing business, it uses standard costing to evaluate its performance for every given period. In period A the management of the company is very disappointed in the performance of the company, they have hired a management accountant to help them better understand the actual picture of the business and make decisions.Following is the budget control report shared with the consultant that is prepared by accounts assistant:Sale (units)Revenue (PKR)Direct material (PKR)Fixed overheads (PKR)Budgeted30,00060,00015.00010.000Actual24,00052,80014,40010,300Required:(a) Calculate the following variances used flexed budgets (that is, considering actual activity level): i. ii. iii.Total sales varianceTotal direct material varianceTotal fixed overheads variance(b) The management has provided the following additional data to better understand the variances:Direct labor cost (PKR)Labor hoursBudgeted7,5006,000Actual72,005,600i.i.iii.Calculate labor rate variance.Calculate labor efficiency variance.Explain why this segregation of total labor variance is important.

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