Question

Question 4 Protas Ltd manufactures product IB2. Each IB2 has a standard cost of £80 made up as follows: Direct materials 15 kilos @ £3 per kilo £45 Direct labour 5 hours @ £4 per hour £20 Fixed overheads £15 The standard selling price of IB2 is £100. The monthly budget is based on production and sales of 1,000 units. Actual figures for the month of April are as follows: Sales 1,400 IB2 @ £102 Production 1,400 IB2 Direct materials 22,000 kilos @ £4 per kilo Direct labour 6,800 hours @ £5 There are no inventories of materials at the beginning or end of the period. Required: Prepare an operating statement showing all appropriate variances on sales price and direct costs. Comment on the possible cause for each variance.

          Question 4
Protas Ltd manufactures product IB2. Each IB2 has a standard cost of £80 made up as
follows:
Direct materials	15 kilos @ £3 per kilo	£45
Direct labour	5 hours @ £4 per hour	£20
Fixed overheads	£15
The standard selling price of IB2 is £100.
The monthly budget is based on production and sales of 1,000 units.
Actual figures for the month of April are as follows:
Sales	1,400 IB2 @ £102
Production	1,400 IB2
Direct materials	22,000 kilos @ £4 per kilo
Direct labour	6,800 hours @ £5
There are no inventories of materials at the beginning or end of the period.
Required:
Prepare an operating statement showing all appropriate variances on sales price and direct
costs. Comment on the possible cause for each variance.

Question 4
Protas Ltd manufactures product IB2. Each IB2 has a standard cost of £80 made up as
follows:
Direct materials 15 kilos @ £3 per kilo £45
Direct labour 5 hours @ £4 per hour £20
Fixed overheads £15
The standard selling price of IB2 is £100.
The monthly budget is based on production and sales of 1,000 units.
Actual figures for the month of April are as follows:
Sales 1,400 IB2 @ £102
Production 1,400 IB2
Direct materials 22,000 kilos @ £4 per kilo
Direct labour 6,800 hours @ £5
There are no inventories of materials at the beginning or end of the period.
Required:
Prepare an operating statement showing all appropriate variances on sales price and direct
costs. Comment on the possible cause for each variance.

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