
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:19. Davidson plc is in the manufacturing industry and it manufactures and sells a
product known as TX. The manager of the department that produces the
products created a monthly budget for the product at the beginning of the
year, based on 10,000 units of the product being produced and sold.
£ per unit
22
(2 hours x £11)
(500g x £30 per kg)
Labour
Materials
15
Fixed overhead
10
Selling price
65
However, in April, only 9,000 units were actually produced and sold and his
actual monthly budget values were as follows:
£
Sales
594,000
Costs:
Labour
18,900 hours
4,700 kg
226,800
131,600
92,000
Material
Fixed overhead
450,400
143,600
Profit
Required
(a) Calculate the following: Material price variance; Material usage variance; Labour
price variance; Labour efficiency variance; Fixed overhead variance; Sales price
variance; Volume variance
(b) Discuss the possible reasons relating to the variances you have calculated.
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