2.2.1 Labour rate variance 2.2.2 Labour efficiency variance 2.2.3 Variable overheads efficiency variance
2.2.1 Labour rate variance 2.2.2 Labour efficiency variance 2.2.3 Variable overheads efficiency variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Question 2
Answer the questions from the information provided.
INFORMATION
The following information was extracted from the accounting
records of Alpha Enterprises for the month ended 31 March
2022:
Sales
Selling price per unit
Finished products on 01 March 2022
Products manufactured during the month
Variable manufacturing costs per unit
Variable selling and administrative costs per unit sold
Fixed manufacturing costs
Fixed selling and administrative costs
3 200 units
R100
400 units
3 600 units
R26
R12
R25 200
R12 400
Transcribed Image Text:Additional information
The variable manufacturing cost per unit and total
manufacturing cost per unit of the finished goods on 01 March
2022 was R21.60 and R26.20 respectively.
2.2 Use the information provided below to calculate the
following manufacturing variances for March 2022. Note: Each
answer must state whether the variance is favourable or
unfavourable.
2.2.1 Labour rate variance
2.2.2 Labour efficiency variance
2.2.3 Variable overheads efficiency variance
2.2.4 Variable overheads expenditure variance
INFORMATION
Nevada Limited set a standard labour rate of R32 per hour and a standard variable overhead rate of R3.80 per
labour hour.
Actual hours worked for March 2022 were 4 910 at a cost of R149 264. The actual variable overhead cost incurred
was R19 640. The standard allowance of labour hours for the output achieved was 5 000 hours.
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