Nyundo Ltd manufactures a product whose standard variable cost is given below: Direct materials (2...
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Nyundo Ltd manufactures a product whose standard variable cost is given below: Direct materials (2 kg @ Sh 3) Direct labour (0.75 hours @ Sh 4) Variable overheads The company treats fixed costs as period costs and therefore they are not charged to products. The following information relates to the month of March 2001. 1/10/2019 31/10/2019 Sh Sh Stocks (all at standard cost) Raw materials 12,000 6,000 Finished goods 36,000 42,500 The following information is available for the month of March 2001: Sh Sales @ Sh 20 per unit Material purchases @ Sh 3.50 per kg Direct labour cost (8000 hours) Variable overheads Material price variance (adverse) 200,000 42,000 30,000 12,000 21,000 The management is wondering whether they could have performed better. Required: Calculate the following variances in each case stating two possible causes: a) Material usage variance b) Labour rate variance. c) Labour efficiency variance. d) Variable overhead expenditure variance: e) Variable overhead efficiency variance
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