A company manufactures one product, and the entire product is sold as soon as it is produced. There are no opening or closing inventories and work in progress is negligible. The company operates a standard costing system and analysis of variances is made every month. The standard cost card for the product, a widget, is as follows.
STANDARD COST CARD - WIDGET
|
Direct materials
|
0.5 kilos at $4 per kilo
|
$2.00
|
|
Direct wages
|
2 hours at $2.00 per hour
|
$4.00
|
|
Variable overheads
|
2 hours at $0.30 per hour
|
$0.60
|
|
Fixed overhead
|
2 hours at $3.70 per hour
|
$7.40
|
|
Standard cost
|
|
$14.00
|
|
Standard profit
|
|
$6.00
|
|
Standing selling price
|
|
$20.00
|
Budgeted output for January was 5,100 units. Actual results for January were as follows. Production of 4,850 units was sold for $95,600
Materials consumed in production amounted to 2,300 kilos at a total cost of $9,800
Labour hours paid for amounted to 8,500 hours at a cost of $16,800 Actual operating hours amounted to 8,000 hours
Variable overheads amounted to $2,600 Fixed overheads amounted to $42,300
Required
Calculate all variances and prepare an operating statement for January.