SD 79 Ltd makes a single product and operates a standard costing system. All goods...
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Accounting
SD 79 Ltd makes a single product and operates a standard costing system. All goods produced in the month are sold and no inventories are held.
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Budgeted monthly production and sales for August 2020 were 2000 units.
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The standard costs per unit were as follows:
Direct material 2.9 kilos at $1.60 per kilo
Direct labour 0.75 hours at $2.35 per hour
3. The actual results for August were as follows:
Production and Sales 2400 units
Materials used 6200 kilos
Material cost $ 10500
Labour hours 1900
Labour cost $ 5100
REQUIRED
(a)
Calculate the following variances:
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(i) Material price variance
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(ii) Material usage variance
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(iii) Total material variance
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(iv) Labour rate variance
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(v) Labour efficiency variance
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(vi) Total Labour variance
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Suggest one reason for each of the variances calculated in (a) above.
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Outline the main advantages of Variance Analysis.
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