125) QUESTION 2 21 REQUIRED Use the information provided below to calculate the

Question

125) QUESTION 2 21 REQUIRED Use the information provided below to calculate the fallawing variances: 13I 13) 2.1.1 Material mix variance 2.1.2 Material yield variance 2.1.3 Fixed manufacturing overheads volume capacity variance 2.14 Fined manufacturing overheads volume efficiency variance Note: Each anwer must indicate whether the variance is favourable or unfavourable INFORMATION The following figures were extracted from the budgeted statement of comprehensive income of Simplex Limited for August 2017, a normal production month in which 20 000 units are expected to be produced Materiais: 10 000 metres at R6 per metrel (10 000 metres at R14 per metre) Direct labour 140 000 10 cc0 hours at R80 per hour The sctual production for August 2017 was 24 003 units and the following is an extract af the statement of comprehensive income Sim 16 000 metres at R4 per metrel 10 000 metres at R16 per metrel 160 000 Direct labour 54 PROGRAMME HANDBOOK: JANUARY 2018 INTAKE

Explanation / Answer

2.1.1

2.1.2

Fixed overhead rate per hr =400000/10000=40 per hr

fixed production overhead volume capacity variance =(budgeted hour - Actual Hr)*Fixed overhead rate per hr

=(10000-12500)*40=$100000 Favorable

Fixed manufacturing overhead volume efficency variance

=(Actual direct labor hr -standard labor hr )* Fixed overhead rate per hr

(12500-.50*24000)*40=$20000 unfavorable

Standard Material Mix SIM 10000 50% Plex 10000 50% 20000

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