Answer:
See below.
Explanation:
Since the costs are per 100, to calculate total standard we multiply by 400,000/100 = 4000 and actual qty then is 4060.
For A, standard cost budget at standard prices.
Direct Labor (2*4000) = $8,000
Direct Material (9.1*4000) = $36,400
Factory Overhead (0.55*4000) = $2,200
Total = $46,600
For B, The total cost variances are as follows,
Material cost variance = (Standard Price - Actual Price) * Actual Quantity
where, Standard price = 9.1 and Actual price = (35750/4060) = $8.81
Variance = (9.1 - 8.81) * 4060 = $1177.4 Favorable
Direct labor cost variance = (Standard rate - Actual Rate) * Actual Quantity
where, Standard rate = 2 and Actual rate = (7540/4060) = $1.86
Variance = (2-1.86) * 4060 = $568.4 Favorable
Factory Overhead variance
= Standard applied - Actual applied
Variance = (0.55*4060) - 2680 = $447 Unfavorable
Net effect on total cost variances = (1177.4+568.4-447) = $1298.8 Favorable
For c)
The over all cost performance has favored the business as they ere able to lessen costs in direct labor and material department. However, the fixed costs performance has deteriorated and there may be some technical issues that the company can deal with to ensure they perform better on fixed costs. The over all performance is favorable.
