Ufundi Furniture Ltd. Manufactures a wide range of home furniture. Recently the company added to its range a side board. The standard cost specification for each...

      

Ufundi Furniture Ltd. Manufactures a wide range of home furniture. Recently the company added
to its range a side board. The standard cost specification for each side board is given below:
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The abnormal idle hours were 400 and the hours worked were recorded as 4,800 hours.

Required:

i) Material price variances (for both materials).
ii) Material usage variance (for both materials)
iii) Labour rate of pay variance.
iv) Labour efficiency variance.
v) Idle time variance.

(c) Suggest possible causes of the material variances.

  

Answers


Martin
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c) Possible cause of material variances

Price variances

i) Paying higher or lower prices than planned
ii) Losing or gaining quantity discounts by buying large of small quantities than planned
iii) Buying lower or higher quality than planned
iv) Buying substitutes material due to unavailability of planned material

Usage variances

i. Greater or lower yield from material than planned
ii. Gains or losses due to use of substandard or higher quality than planned
iii. Greater or lower rate of scrap than anticipated.
marto answered the question on February 26, 2019 at 08:13


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