Reference no: EM132585978

Based on the information provided by the company's management, we will calculate the variations in materials, labor and indirect cost.

The company uses a standard cost system. Standard prime costs per unit include three units of materials at a standard price of $ 38 and one-half hour of direct labor at the standard rate of $ 20.

Information to calculate variations is provided below:

Of materials Of labor        Indirect cost

Budgeted Hours                  30,000

Worked hours of labor            19,320

Budgeted production            60,000

Actual production                 52,000

Materials purchased at a rate of $ 32.5 per unit     $ 640,000

Used materials                                   $ 325,800

Fixed real indirect cost (IC)                $ 78,100

Total actual indirect cost (IC)             $ 368,200

Budgeted Variable Indirect Cost (IC)       $ 290,000

Budgeted Fixed Indirect Cost (IC)               $ 80,000

Question 1: What is the budget variation made of? Define in your words each of its elements.