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19. Davidson plc is in the manufacturing industry and it manufactures and sells a product known as TX. The manager of the department that produces the products created a monthly budget for the product at the beginning of the year, based on 10,000 units of the product being produced and sold. £ per unit 22 (2 hours x £11) (500g x £30 per kg) Labour Materials 15 Fixed overhead 10 Selling price 65 However, in April, only 9,000 units were actually produced and sold and his actual monthly budget values were as follows: £ Sales 594,000 Costs: Labour 18,900 hours 4,700 kg 226,800 131,600 92,000 Material Fixed overhead 450,400 143,600 Profit Required (a) Calculate the following: Material price variance; Material usage variance; Labour price variance; Labour efficiency variance; Fixed overhead variance; Sales price variance; Volume variance (b) Discuss the possible reasons relating to the variances you have calculated.

19. Davidson plc is in the manufacturing industry and it manufactures and sells a product known as TX. The manager of the department that produces the products created a monthly budget for the product at the beginning of the year, based on 10,000 units of the product being produced and sold. £ per unit 22 (2 hours x £11) (500g x £30 per kg) Labour Materials 15 Fixed overhead 10 Selling price 65 However, in April, only 9,000 units were actually produced and sold and his actual monthly budget values were as follows: £ Sales 594,000 Costs: Labour 18,900 hours 4,700 kg 226,800 131,600 92,000 Material Fixed overhead 450,400 143,600 Profit Required (a) Calculate the following: Material price variance; Material usage variance; Labour price variance; Labour efficiency variance; Fixed overhead variance; Sales price variance; Volume variance (b) Discuss the possible reasons relating to the variances you have calculated.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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19. Davidson plc is in the manufacturing industry and it manufactures and sells a product known as TX. The manager of the department that produces the products created a monthly budget for the product at the beginning of the year, based on 10,000 units of the product being produced and sold. £ per unit 22 (2 hours x £11) (500g x £30 per kg) Labour Materials 15 Fixed overhead 10 Selling price 65 However, in April, only 9,000 units were actually produced and sold and his actual monthly budget values were as follows: £ Sales 594,000 Costs: Labour 18,900 hours 4,700 kg 226,800 131,600 92,000 Material Fixed overhead 450,400 143,600 Profit Required (a) Calculate the following: Material price variance; Material usage variance; Labour price variance; Labour efficiency variance; Fixed overhead variance; Sales price variance; Volume variance (b) Discuss the possible reasons relating to the variances you have calculated.
Transcribed Image Text:19. Davidson plc is in the manufacturing industry and it manufactures and sells a product known as TX. The manager of the department that produces the products created a monthly budget for the product at the beginning of the year, based on 10,000 units of the product being produced and sold. £ per unit 22 (2 hours x £11) (500g x £30 per kg) Labour Materials 15 Fixed overhead 10 Selling price 65 However, in April, only 9,000 units were actually produced and sold and his actual monthly budget values were as follows: £ Sales 594,000 Costs: Labour 18,900 hours 4,700 kg 226,800 131,600 92,000 Material Fixed overhead 450,400 143,600 Profit Required (a) Calculate the following: Material price variance; Material usage variance; Labour price variance; Labour efficiency variance; Fixed overhead variance; Sales price variance; Volume variance (b) Discuss the possible reasons relating to the variances you have calculated.
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