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Question:
The Kaiserburger fast-food operates to the following pre-determined standards:
Raw material 50 kg @2.5 125 Direct labour 14 hrs @ 4.75 66.50
The Actual results are as follows:
Production 150 units Direct material purchased 7,000 kg @ a cost of Rs 18,200 Opening stock direct materials 1,300 kg Closing stock direct materials 850 kg Wages paid for 2020 hrs Rs 9898
Required:
(a) Determine the following variances: (i) Material price variance (ii) Material usage variance (iii) Labour rate variance (iv) Labour efficiency variance Briefly describe three causes for each why material price variance and labour rate variance occur.
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