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QUESTION 3 (25 MARKS) Pepeta (Pty) Ltd produces a small range of bottles for a...

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QUESTION 3 (25 MARKS) Pepeta (Pty) Ltd produces a small range of bottles for a pharmaceutical company. The bottles are Type X and Type Y. They are all made from the same type of plastic and are produced using the same direct labour force. Detailed below is the standard cost information for a single bottle of each type, and data relevant to the most recent production period: The standard cost of material is R820 per kilogram. A reminder that there are 1000 grams in a kilogram. The standard rate of pay for production operatives is R40 per hour. ACTUAL PRODUCTION AND COST INFORMATION REQUIRED: 1. Calculate the total standard cost of a single Type X bottle and 0 a single Type Y bottle (7) 2. For the most recent production period calculate the following variances: a. Material price variance (2) b. Material usage variance (2) c. Labour rate variance (2) d. Labour efficiency variance (2) e. Total variable overhead variance 3. Give two possible reasons for each of the four variances (a to d) calculated in Part (2) above. You should ensure that the reasons given relate to the fact that the variances calculated in Part (2) above were favourable or adverse. (8)

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