- 6 Marks
ICMA – Nov 2024 – L1 – Q3c – Material and Labour Variances
Calculates material and labour variances based on given actual and standard cost data.
Question
Material and Labour Variances
The data below relates to Agbamame Enterprise for its flagship product, “Herb of Life”:
Standard Cost Card – Per Unit of Herb of Life
Description | Cost (GH¢) |
---|---|
Direct materials | 5 kg at GH¢4 per kg = GH¢20 |
Direct labour | 4 hours at GH¢15 per DLH = GH¢60 |
Variable overhead | 4 hours at GH¢20 per DLH = GH¢80 |
Fixed overhead | GH¢50 per unit |
Budgeted production: 600 units
Actual sales and production: 550 units
Actual cost of:
Actual Costs | Cost (GH¢) |
---|---|
Labour (1650 hours) | 16,500 |
Materials (1650 kg) | 5,775 |
Fixed overhead | 15,000 |
Variable overhead | 13,275 |
Data shows that 5% of labour hours paid for was idle, and 10% of materials bought was in stock at the end of the period.
Required:
i) Calculate the material variances.
ii) Calculate the labour variances.
Find Related Questions by Tags, levels, etc.
- Tags: Labour Variance, Material Variance, Standard Costing, Variance Analysis
- Level: Level 1
- Topic: Standard Costing and Variance Analysis
- Series: Nov 2024