Variance Analysis

Question 1: Calculate the material purchase price variance, which is
(actual price – standard price) × actual quantity of materials used
Question 2: Work out the actual hours worked, to the nearest hour, remembering that the direct labour usage variance is equal to:
(actual labour hours – standard labour rate hours) × standard labour rate

 

 

Standard unit price of materials	£9.00
Actual unit price of materials	£8.68
Standard quantity of material for actual production (units)	3,300
Actual quantity of materials purchased and used (units)	3,600
Standard direct labour rate	£28.00
Actual direct labour rate	£24.40
Standard direct labour hours	24,000
Direct labour usage variance	£28,280 U = unfavourable or adverse

 

 

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