a)
i)
|
|
|
$
|
|
|
Material total variance
|
|
|
|
|
Total standard cost
|
10 kgs11,000 units$5
|
550,000
|
|
|
Total actual cost
|
120,000 kgs
|
580,000
|
|
|
Material total variance
|
|
30,000 (F)
|
|
|
Material price variance
|
|
|
|
|
Material used cost
|
120,000 kgs$5
|
600,000
|
|
|
Actual cost
|
|
580,000
|
|
|
|
|
20,000 (A)
|
|
|
Material usage variance
|
|
|
|
|
For 11,000 units, material used should be
|
10 kgs11,000 units$5
|
550,000
|
|
|
Actual usage
|
120,000 kgs$5
|
600,000
|
|
|
|
|
50,000 (F)
|
|
|
Reasons for material variances
|
|
|
A slight decrease in price of material perhaps is due to a poorer quality, which caused more material is been used.
|
|
|
|
|
|
|
|
|
|
|
ii)
|
|
|
$
|
|
|
Sales total variance
|
|
|
|
|
Budgeted sales revenue
|
10,000 units$145
|
1,450,000
|
|
|
Actual sales revenue
|
9,000 units$150
|
1,350,000
|
|
|
|
|
100,000 (A)
|
|
|
Sales price variance
|
|
|
|
|
Revenue from 9,000 units
|
9,000 units$145
|
1,305,000
|
|
|
Actual sales revenue
|
9,000 units$150
|
1,350,000
|
|
|
|
|
45,000 (F)
|
|
|
Sales volume variance
|
|
|
|
|
Budget sales volume
|
10,000 units$145
|
1,450,000
|
|
|
Actual sales volume
|
9,000 units$145
|
1,305,000
|
|
|
|
|
145,000 (A)
|
|
|
Sales are lower than budgeted perhaps due to a competitive market. Increase in price or less favorable quality of product is connected to lesser quality material used (see comments on material variances).
|
|
|
|
|
|
|
|
b)
|
|
$
|
|
Fixed overhead total variance
|
|
|
|
Fixed overhead incurred
|
|
90,000
|
|
Fixed overhead absorbed
|
11,000 units$8
|
88,000
|
|
|
|
2,000 (A)
|
|
Fixed overhead expenditure variance
|
|
|
|
Budgeted fixed overhead expenditure
|
|
80,000
|
|
Actual fixed overhead expenditure
|
|
90,000
|
|
|
|
10,000 (A)
|
|
Fixed overhead volume variance
|
|
|
|
Actual production at standard rate
|
11,000 units$8
|
88,000
|
|
Budgeted production at standard rate
|
10,000 units$8
|
80,000
|
|
|
|
8,000 (F)
|
|
Fixed overhead volume efficiency variance
|
|
|
|
11,000 units should take
|
11,000 units4 hours
|
44,000
|
|
But did take
|
|
48,000
|
|
|
|
4,000
|
|
|
|
$2
|
|
|
|
$8,000 (A)
|
|
Fixed overhead volume variance
|
|
|
|
Budgeted hour of work at actual production
|
|
44,000
|
|
Actual hour worked
|
|
48,000
|
|
|
|
4,000
|
|
At standard rate for fixed overhead absorption
|
|
$2
|
|
|
|
8,000 (F)
|
|
