IM17.3 Intermediate: Calculation of labour, material and overhead variances and reconciliation of budgeted and actual...
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IM17.3 Intermediate: Calculation of labour, material and overhead variances and reconciliation of budgeted and actual profit. You are the management accountant of T plc. The following computer printout shows details relating to April: Actual Budget 4900 units 15.00 5400 units 5000 units 14.00 5000 units 10600 0.60 10000 0.50 Sales volume Selling price per unit Production volume Direct materials kgs price per kg Direct labour hours per unit rate per hour Fixed overhead: Production Administration 0.55 11.40 0.50 12.00 10300 3 100 10000 3000 T plc uses a standard absorption costing system. There was no opening or closing work in progress. Requirements: (a) Prepare a statement that reconciles the budgeted profit with the actual profit for April, showing individual variances in as much detail as the above data permit. (20 marks) (b) Explain briefly the possible causes of: (i) the material usage variance; (ii) the labour rate variance; (iii) the sales volume profit variance. (6 marks) (c) Explain the meaning and relevance of interdependence of variances when reporting to managers. (4 marks) CIMA Stage 2 Operational Cost Accounting
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