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| A company has prepared the following standard cost card: | | | |
| | | | | | $ Per unit | | | |
| | | | | | | | | |
| Materials | | (4 kg at $4.50 per kg) | 18 | | | |
| Labour | | (5 hrs at $5 per hr) | | 25 | | | |
| Variable overheads | (5 hrs at $2 per hr) | | 10 | | | |
| Fixed overheads | (5 hrs at $3 per hr) | | 15 | | | |
| | | | | | | | | |
| Total | | | | | $68 | | | |
| | | | | | | | | |
| | | | | | | | | |
| Budgeted selling price | | | $75 per unit. | | |
| | | | | | | | | |
| | | | | | | | | |
| Budgeted production | | 8,700 units | | | |
| Budgeted sales | | | 8,000 units | | | |
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| There is no opening inventory | | | | | | |
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| The actual results are as follows: | | | | | |
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| Sales: | | 8,400 units for | | | | | $613,200 |
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| Production: | 8,900 units with the following costs: | | | |
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| Materials | | | (35,464 kg) | | | | 163,455 |
| Labour | | | (Paid 45,400hrs; worked 44,100 hrs) | | 224,515 |
| Variable overheads | | | | | | | 87,348 |
| Fixed overheads | | | | | | | 134,074 |
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a) Calculate variances, identify possible causes and recommend corrective action.
b) prepare an operating statement reconciling budgeted and actual results
c) Report findings to management in accordance with identified responsibility centers.
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