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Sultan limited uses the standard costing system

Accounting

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Sultan limited uses the standard costing system. The company budgeted the following figures for December 2021 for 40 000 units:

- 80 000 meters of direct materials at R6 per metre

. - 40 000 hours of direct labour at R10.20 per hour.

- Variable manufacturing overheads are R2 per labour hour.

- Fixed manufacturing overheads are R320 000.

During December 2021 the company started and completed 42 000 units and the following transactions were recorded:

- Purchases of material: 120 000 metres at R6.40 per metre

- Material issues: 90 000 metres - Direct wages paid: 46 000 hours at R9.80 per hour

- Manufacturing overheads incurred:

- Variable R96 600

- Fixed: R324 000

REQUIRED Use the information given above to calculate the following variances and in each case provide a possible reason for the variance: Note: Each answer must indicate whether the variance is favourable (F) or unfavourable (U).

1.1 Material quantity variance (4 marks)

1.2 Direct labour rate variance (4 marks)

1.3 Direct labour efficiency variance (4 marks)

1.4 Variable overheads expenditure variance (4 marks)

1.5 Variable overheads efficiency variance (4 marks)

1.6 Fixed overheads volume variance.