08 November 2008
suppose that 4 kgs of material A are required to make one unit of product TS, each kilogram costing Rs.10. It takes direct labour 5 hours to make one unit of product TS. The labour force is paid Rs.4.50 per hour.
During the period the following results were recorded. Material A: 8,200 kgs purchased on credit* Rs.95000 Material A: kgs issued to production* 8200 kgs Units of product TS produced* 1600 Direct labour hours worked* 10000 Cost of direct labour* Rs.32000
Required: (a) Calculate the following variances for the period. · Material price variance · Material usage variance · Labour rate variance · Labour efficiency variance (b) Prepare journal entries for the transactions marked * above, together with the variances calculated in (a).
You should make the following assumptions · An integrated accounting system is maintained · There are no opening or closing stocks of work in progress. Please mail the solution to psrinivas1 @ in.com
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