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identify possible reasons for the sales, material and labour variance Question...

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Accounting

identify possible reasons for the sales, material and labour variance
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Question 1 Aplavin Ltd produces 3 different types of bikes called Mountain Bikes, Racing bikes and Commuter bikes. The production methods and equipment for each of these bike production facilities are very similar. Aplavine Ltd uses a traditional costing method at present. The director of the company is certain that activity-based costing (ABC) system will be better than their current costing system. Detail cost breakdown of the three products for a typical period are as follows: Direct labour cost 7.20 / hours and production overheads are absorbed on a machine hour basis. The rate for the period is 25/ hour. The director also gave you the following information on cost: - Overhead is divided in 4 different cost centres. These are setups, machines, material movement and inspection. Setups cost 30%, Machines costs 25%, Material handling costs 20% and inspection cost 25% of the total overhead costs. - The activity breakdown per different types of bikes are as follnws

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