V Limited operates a standard costing system and a system of budgetary control. The budgeted infomation and standard costs for March 2020 were as follows. Budgeted output 2500 units Budgeted fixed overheads $48000 Standard cost per unit Direct materials $24 (3 kilos at $8 each) Direct labor $64 (4 hours at $16 each) V Limited uses labor hours to absorb fixed overheads. The actual results for March 2020 were as follows. Output 2400 units Fixed overheads $49800 Direct materials cost $68340 Direct materials usage 8040 kilos Direct labor costs $156864 Direct labor hours 9120 hours Required: (a) (1) Calculate the direct materials price and quantity variance. (11) State the 2 reasons for each of the direct materials variance. (b) 1) Calculate the direct labor rate and efficiency variance. (ii) State the 2 reasons for each of the direct labor variance. (c) (1) Calculate the fixed overheads expenditure variance. (11) Calculate the fixed overheads volume variance
V Limited operates a standard costing system and a system of budgetary control. The budgeted infomation and standard costs for March 2020 were as follows. Budgeted output 2500 units Budgeted fixed overheads $48000 Standard cost per unit Direct materials $24 (3 kilos at $8 each) Direct labor $64 (4 hours at $16 each) V Limited uses labor hours to absorb fixed overheads. The actual results for March 2020 were as follows. Output 2400 units Fixed overheads $49800 Direct materials cost $68340 Direct materials usage 8040 kilos Direct labor costs $156864 Direct labor hours 9120 hours Required: (a) (1) Calculate the direct materials price and quantity variance. (11) State the 2 reasons for each of the direct materials variance. (b) 1) Calculate the direct labor rate and efficiency variance. (ii) State the 2 reasons for each of the direct labor variance. (c) (1) Calculate the fixed overheads expenditure variance. (11) Calculate the fixed overheads volume variance
Chapter1: Financial Statements And Business Decisions
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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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![QUESTION 8
V Limited operates a standard costing system and a system of budgetary control.
The budgeted information and standard costs for March 2020 were as follows.
Budgeted output 2500 units
Budgeted fixed overheads $48000
Standard cost per unit
Direct materials $24 (3 kilos at $8 each)
Direct labor $64 (4 hours at $16 each)
V Limited uses labor hours to absorb fixed overheads.
The actual results for March 2020 were as follows.
Output 2400 units
Fixed overheads $49800
Direct materials cost $68340
Direct materials usage 8040 kilos
Direct labor costs $156864
Direct labor hours 9120 hours
Required:
(a) (i) Calculate the direct materials price and quantity variance.
(ii) State the 2 reasons for each of the direct materials variance.
(b) 1) Calculate the direct labor rate and efficiency variance.
(ii) State the 2 reasons for each of the direct labor variance.
(c) (i) Calculate the fixed overheads expenditure variance.
(ii) Calculate the fixed overheads volume variance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F29f06e58-b574-42e1-a586-aea083d47c2c%2F37e43a21-16c4-4181-a013-2f6d5ff010c0%2Fa0ox5f6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 8
V Limited operates a standard costing system and a system of budgetary control.
The budgeted information and standard costs for March 2020 were as follows.
Budgeted output 2500 units
Budgeted fixed overheads $48000
Standard cost per unit
Direct materials $24 (3 kilos at $8 each)
Direct labor $64 (4 hours at $16 each)
V Limited uses labor hours to absorb fixed overheads.
The actual results for March 2020 were as follows.
Output 2400 units
Fixed overheads $49800
Direct materials cost $68340
Direct materials usage 8040 kilos
Direct labor costs $156864
Direct labor hours 9120 hours
Required:
(a) (i) Calculate the direct materials price and quantity variance.
(ii) State the 2 reasons for each of the direct materials variance.
(b) 1) Calculate the direct labor rate and efficiency variance.
(ii) State the 2 reasons for each of the direct labor variance.
(c) (i) Calculate the fixed overheads expenditure variance.
(ii) Calculate the fixed overheads volume variance
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