Indian Institute of Management Kashipur

PGP 2016-18, Term II

Management Accounting
Quiz 8
Maximum Marks: 10 Time: 30 Minutes.
Name..................... Roll No.....................

Prado Corporation manufactures and sells a single product. The company uses a standard cost
system. The standard cost per unit of product follows:

Materials—1 lb plastic@$3.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.00

Direct labour—1.6 hr@$10.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.00
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.45
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23.45

The charges to the manufacturing department for November, when 5,000 units were
produced, follow:

Materials—5,300 lb @$2.80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,840

Direct labour—8,200 hr@$9.80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,360
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,815
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $119,015

The purchasing department normally buys about the same quantity as is used in production
during a month. In November, 5,500 pounds were purchased at a price of $2.80 per pound.
Calculate:

1. Material Price Variance (2):

2. Material Usages Variance (2):

3. Material Cost Variance (1):

4. Labour Efficiency Variance (2):

5. Labour Wage Rate Variance (2):

6. Labour Cost Variance (1):