A company produces a product which has a standard variableproduction cost of $8 per unit made up as
follows:
$Per Unit
Directmaterial $4.60(2kg X $2.30 per kg)
Direct labour $2.10(0.7 hours x $3.00 per hour)
Variable overhead $1.3
Fixed manufacturing costs are treated as period costs. Thefollowing information is available for the period just ended,
Variable manufacturing cost of sales (at standardcost) $263,520
Opening stock of finished goods (at standardcost) $120,800
Closing stock of finished goods (at standardcost) $146,080
Direct material pricevariance $2,571U
Raw materials used in manufacture (at actualcost) $170,310
Direct labour rate variance $4,760U
Direct labour efficiency variance $3,240F
Required:
(a) Determine for the period ended.
(i) Thetotal actual direct labour cost, and
(ii) Theactual cost per kg of raw material used.
(b) Outline the possible causes of the rawmaterials variances
