**Philip Dunn has set you some multiple choice questions on the much-examined topic of variance analysis. Find the answers as the end of the article.**

Hawsker Feeds Ltd is an SME based in North Yorkshire. It produces a single animal feedstuff that sells at £210 per tonne.

Its budget and actual activity for January X20 showed the following.

Budget | Actual | |

Output (Tonnes) | 1,500 | 1,600 |

Standard labour hours per tonne | 0.75 | |

Actual direct labour hours worked | 1,250 | |

Actual cost of direct labour | £12,750 | |

Standard usage of direct material per tonne of output | 1.1 tonnes | |

Standard direct material cost per tonne | £120 | |

Actual cost of direct material | £234,240 | |

Actual usage of raw material | 1,920 tonnes | |

Budgeted fixed overhead | £40,500 | |

Actual fixed overhead | £38,000 | |

## Tasks

**2: Determine the budgeted hours in the month.**

**a.** 1,200

**b.** 1,500

**c.** 1,125

**d.** 1,250

**3: Calculate the efficiency ratio for the month.**

**a.** 90%

**b.** 111.1%

**c. **104.2%

**d.** 96%

**4: Calculate the activity or productive volume ratio for the month.**

**a.** 93.7%

**b.** 106.7%

**c.** 90%

**d.** 111.1%

**5: Calculate the capacity ratio for the month.**

**a.** 111.1%

**b.** 96%

**c.** 104.2%

**d.** 106.7%

**6: Calculate the direct labour cost variance for the month.**

**a.** £510 Favourable

**b.** £750 Adverse

**c.** £250 Adverse

**d.** £1,250 Adverse

**7: Calculate the direct labour rate variance for the month.**

**a.** £225 Adverse

**b.** £240 Adverse

**c.** £250 Adverse

**d.** 250 Favourable

**8: Calculate the direct labour efficiency variance.**

**a.** £750 Favourable

**b.** £750 Adverse

**c.** £1,250 Adverse

**d.** £500 Adverse

**9: Calculate the direct material cost variance.**

**a. **£36,240 Adverse

**b.** £36,240 Favourable

**c. **£23,040 Adverse

**d.** £23,040 Favourable

**10: Calculate the direct material usage variance.**

**a.** £19,200 Adverse

**b.** £19,200 Favourable

**c.** £32,400 Adverse

**d.** £32,400 Favourable

**11: Calculate the direct material price variance.**

**a.** £3,300 Adverse

**b.** £3,840 Adverse

**c.** £3,840 Favourable

**d.** £3,300 Favourable

**12: Calculate the fixed overhead variance.**

**a.** £5,400 Favourable

**b.** £5,400 Adverse

**c.** £5,200 Favourable

**d.** £5,200 Adverse

**13: Calculate the fixed overhead expenditure variance. **

**a. **£2,700 Favourable

**b.** £2,700 Adverse

**c.** £2,500 Adverse

**d.** £2,500 Favourable

**14: Calculate the fixed overhead volume variance.**

**a.** £1,800 Favourable

**b. **£1,800 Adverse

**c.** £2,700 Favourable

**d.** £2,700 Adverse

**15: Calculate the fixed overhead capacity variance.**

**a.** £4,500 Favourable

**b.** £4,500 Adverse

**c.** £9,000 Favourable

**d.** £9,000 Adverse

**16: Calculate the fixed overhead efficiency variance.**

**a.** £2,700 Favourable

**b.** £1,800 Adverse

**c.** £1,800 Favourable

**d**. £2,700 Adverse

**• Dr Philip E Dunn is a freelance author and technical editor for Kaplan and Osborne Books**

## Answers

**1: C**

**2: C**

**3: D**

**4: B**

**5: A**

**6: B**

**7: C**

**8: D**

**9: C**

**10: A**

**11: B**

**12: C**

**13: D**

**14: C**

**15: A**

**16: B**