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)||
|Actual quantity of materials purchased and used (units)||
|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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