SC03 SOLUTION

1 Material Price
Standard Price Actual Price Unit Variance Type
Platinum 30 35 350 000.00 -1 750 000.00 Adverse 2.00

Material Usage
Standard Usage Actual Usage Unit Variance Type
Platinum 440 000 330 000.00 30 3 300 000.00 Favorable 2.00

Labour Rate
Total Actual Hours
Standard Rate Actual Rate Variance Type
Paid
Skilled Labour 20.00 23.81 126 000.00 (480 060.00) Adverse 2.00

Labour efficiency
Standard Hours Actual hours Standard Rate Variance Type
Skilled Labour 110 000 126 000.00 20.00 (320 000.00) Adverse 2.00

Variable Overhead Rate

Standard Actual Unit Variance Type
16 14.29 126 000.00 216 000.00 Favorable 2.00

Variable Overhead Efficiency

110 000 126 000.00 16.00 (256 000.00) Adverse 2.00

Fixed Overhead
Standard Actual Rate Variance Type
4 400 000 4 000 000.00 - 400 000.00 Favorable 1.00
 Sales Margin Price
Standard Sales Price Actual Selling Price Unit Variance Type
1 176.00 1 200.00 25 000.00 600 000.00 Favorable 2.00
Sales Margin Volume
Standard
Standard sales units Actual sales units Variance Type
Contribution
30 000 25 000 396 (1 980 000.00) Adverse 2.00

Workings
Total cost price per unit 980 given
Selling price per unit 980*120/100 1 176 1.00
Total Variable costs 780 given
Marginal revenue per unit 1176 -780 396 1.00
19.00
2 Material Price and Usage variance
The price is negative however the and usage variance is postive 1.00
This may be the result of the company purchasing high valuded materials which had a better quality and therefore resulted in a lower usage per kg 2.00

Labour Variances
All labour variances are negative 1.00
This could meand that the company's labour is not as skilled as the company thought thus labours are taking more time then expected to complete the final product 1.00

Overehad variances
Variable overhead variance is related to labour hours, however the rate variance may be a result of a decreased cost of purchasing materials used in production 1.00
Fixed overhead variance was a result of a decrease in the monthly rental with the landlord 1.00

Sales variances
The company has increased selling prices and this has resulted in a decrease in units sold, the increase in selling prices may be as a result of the: 1.00
materials purchased being more then expected as seen by the negative materials price variance 1.00
Available 9.00
Max 9.00
Total SC03 28.00