Omega PLC manufactures a product for which the standard cost data are as follows:
|
|
Units of input
|
Cost per input unit (£)
|
Cost per unit of output (£)
|
|
Direct materials
|
3 kg
|
5
|
15
|
|
Direct labour
|
2 hours
|
4
|
8
|
|
Variable overhead
|
2 hours
|
2
|
4
|
|
Fixed overhead
|
2 hours
|
10
|
20
|
|
Standard cost
|
|
|
47
|
The budget for the month of April was set at an output of 5000 units and a total cost of £235,000.
The actual output and costs for the month of April were as follows:
|
Actual output
|
4800 units
|
|
Actual costs (£)
|
|
|
Direct materials (14,480 kg)
|
73,656
|
|
Direct labour (9700 DIH)
|
38,800
|
|
Variable overhead
|
18,960
|
|
Fixed overhead
|
99,000
|
|
Total costs
|
£230,416
|
(a) Calculate the following variances and associated subvariances for April: total cost; Direct material; Direct labour; Variable overhead; Fixed overhead.
(b) Interpret the information provided by the fixed overhead variances in this case.