Academic MBA Question:
You are required to compute all Variances for ABC Ltd. The company is producing a single product for which the standard cost data per unit of output is as given below:
Direct Material 20 Kg @ Rs 10 per kg
Direct Labour 12 hours at Rs 5.50 per hour
Variable Overheads 12 hours at Rs 10 per hour
Fixed Overheads Rs. 9,00,000 per month based on a normal volume of 60,000 direct labour hours
Selling Price Rs 600 per unit
The costs incurred and other relevant information for the month of November 2018 are as under.
Direct Material used 1,00,000 Kg at a cost of Rs. 10,50,000
Direct Wages Paid Rs 3,10,000 for 62,000 hours worked
Overheads Rs. 15,26,000 out of which a sum of Rs. 9,40,000 is fixed.
Actual Output Rs. 4,800 units sold for Rs. 28,32,000.
Assume no stocks of work-in-progress or finished goods at the beginning or at the end of the month.