(B)Gladys Co manufactures one product, and the entire product is sold as soon as it is
produced. There are no opening or closing inventories and work in progress is
negligible. The company operates a standard costing system and analysis of
variances is made every month. The standard cost card for a product is as follows.
STANDARD COST CARD K per unit
Direct materials 0.5 kilos at K4 per kilo 2.00
Direct wages 2 hours at K8.00 per hour 16.00
Variable overheads 2 hours at K0.30 per hour 0.60
Standard contribution 13.40
Standing selling price 32.00
Budgeted output for the month of June 2022 was 5,100 units. Actual results for June
2022 were as follows.
Production of 4,850 units was sold for K150,350. Materials consumed in production
amounted to 2,300 kgs at a total cost of K9,800. Labour hours paid for amounted to
8,500 hours at a cost of K67,800. Actual labour hours worked amounted to 8,000
hours. Variable overheads amounted to K2,600.
Required
Calculate the following variances. (2 marks each variance)
i. Material price variance
ii. Material usage variance
iii. Labour rate variance
iv. Labour efficiency variance
v. Idle time variance
vi. Variable overhead expenditure variance
vii.
Variable overhead efficiency variance
viii. Sales price variance
ix. Sales volume contribution variance
[Total:25 Marks)
