Refreshers Limited specialises in making fresh juices by hand with organic fruits. The company has...
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Accounting
Refreshers Limited specialises in making fresh juices by hand with organic fruits. The company has developed the following standard costs:
Standard quantity or hours
Standard price or rate
Direct material
1.3
kg
$6.00
per litre
Direct labour
0.6
hours
$19.00
per hour
Variable overhead
0.6
hours
$3.00
per hour
During April, Refreshers Limited made 4,100 bottles of fresh juice and used 5,380 kg of direct material and 2,540 direct labor-hours. In total, 6,000 kg of direct material was purchased during the month at $5.80 per kg. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour.
Variable overhead is applied based on direct labor-hours.
Compute the following:
A) Labour efficiency variance
B) Labour rate variance
C) Variable overhead rate variance
D) Variable overhead efficiency variance
Answer & Explanation
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