The Following Standard Costs Were Developed for One of the Products

question 56

Essay

The following standard costs were developed for one of the products of CH Industries:
The following information is available regarding the company's operations for the period:
Budgeted fixed overhead for the period is £960,000, and the standard fixed overhead rate is based on an expected capacity of 80,000 direct labour hours.
Required:

a.
Calculate the materials price variance and indicate whether it is favorable or unfavorable.
b.
Calculate the materials usage variance and indicate whether it is favorable or unfavorable.
c.
Calculate the labour rate variance and indicate whether it is favorable or unfavorable.
d.
Calculate the labour efficiency variance and indicate whether it is favorable or unfavorable.
e.
Calculate the variable overhead spending (expenditure)variance and indicate whether it is favorable or unfavorable.
f. Calculate the variable overhead efficiency variance and indicate whether it is favorable or unfavorable.

g. Calculate the fixed overhead spending (expenditure) variance and indicate whether it is favorable or unfavorable.

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Definitions:

Relative Frequency

The ratio of the absolute frequency of a particular value to the total number of data values in a dataset.

Class B

Often used in categorization systems to denote a second or intermediate quality, level, or grouping.

Absolute Frequency

The total count of occurrences of a specific event or characteristic in a given dataset.

Median

The middle value in a set of data when it is ordered in numerical sequence, or the average of the two middle values when the set has an even number of values.