1. **Problem Statement:** Calculate variances for materials, labour, overheads, and idle time for Bwana Furniture Ltd. based on given standard and actual data. 2. **Material X (Timber) Variances:** - Standard price per kg = 150 - Standard quantity for 9,500 desks = 3.0 kg/desk \times 9,500 = 28,500 kg - Actual quantity = 29,700 kg - Actual cost = 4,500,000 - Actual price per kg = \frac{4,500,000}{29,700} = 151.52 **Material Price Variance (MPV):** $$MPV = (Standard\ Price - Actual\ Price) \times Actual\ Quantity = (150 - 151.52) \times 29,700 = -44,944$$ (Adverse) **Material Usage Variance (MUV):** $$MUV = (Standard\ Quantity - Actual\ Quantity) \times Standard\ Price = (28,500 - 29,700) \times 150 = -180,000$$ (Adverse) 3. **Material Y (Varnish) Variances:** - Standard price per litre = 300 - Standard quantity for 9,500 desks = 0.5 \times 9,500 = 4,750 litres - Actual quantity = 5,200 litres - Actual cost = 1,584,000 - Actual price per litre = \frac{1,584,000}{5,200} = 304.62 **Material Price Variance:** $$MPV = (300 - 304.62) \times 5,200 = -24,024$$ (Adverse) **Material Usage Variance:** $$MUV = (4,750 - 5,200) \times 300 = -135,000$$ (Adverse) 4. **Labour Variances:** - Standard labour hours = 4.0 \times 9,500 = 38,000 hours - Actual labour hours = 40,200 - Actual labour cost = 3,360,000 - Actual labour rate = \frac{3,360,000}{40,200} = 83.58 **Labour Rate Variance (LRV):** $$LRV = (Standard\ Rate - Actual\ Rate) \times Actual\ Hours = (80 - 83.58) \times 40,200 = -143,316$$ (Adverse) **Labour Efficiency Variance (LEV):** $$LEV = (Standard\ Hours - Actual\ Hours) \times Standard\ Rate = (38,000 - 40,200) \times 80 = -176,000$$ (Adverse) 5. **Idle Time Variance:** - Idle time hours = 1,200 - Idle time variance = Idle hours \times Standard rate $$Idle\ Time\ Variance = 1,200 \times 80 = 96,000$$ (Adverse) 6. **Variable Overhead Variances:** - Standard variable overhead rate = 60 per direct labour hour - Standard hours = 40,200 (actual labour hours) - Actual variable overhead = 2,640,000 - Standard variable overhead = 40,200 \times 60 = 2,412,000 **Variable Overhead Spending Variance:** $$VOSV = Actual\ VO - (Standard\ Rate \times Actual\ Hours) = 2,640,000 - 2,412,000 = 228,000$$ (Adverse) **Variable Overhead Efficiency Variance:** $$VOEV = (Standard\ Hours - Actual\ Hours) \times Standard\ Rate = (38,000 - 40,200) \times 60 = -132,000$$ (Adverse) 7. **Fixed Overhead Variances:** - Budgeted fixed overhead = 480,000 - Actual fixed overhead = 430,000 - Budgeted production = 10,000 desks - Actual production = 9,500 desks - Fixed overhead rate per desk = \frac{480,000}{10,000} = 48 **Fixed Overhead Budget (Spending) Variance:** $$FOBV = Budgeted\ FO - Actual\ FO = 480,000 - 430,000 = 50,000$$ (Favorable) **Fixed Overhead Volume Variance:** $$FOVV = (Budgeted\ Production - Actual\ Production) \times FO\ Rate = (10,000 - 9,500) \times 48 = 24,000$$ (Adverse) 8. **Causes and Corrective Actions:** - **Materials:** - Causes: Poor quality control leading to wastage; price increases from suppliers. - Corrective Actions: Improve supplier negotiation and quality checks. - **Labour:** - Cause: Inefficient work methods causing overtime and idle time. - Corrective Action: Train workers and optimize scheduling to reduce idle time. **Final answers:** - Timber MPV = -44,944 (Adverse), MUV = -180,000 (Adverse) - Varnish MPV = -24,024 (Adverse), MUV = -135,000 (Adverse) - Labour Rate Variance = -143,316 (Adverse), Labour Efficiency Variance = -176,000 (Adverse) - Idle Time Variance = 96,000 (Adverse) - Variable Overhead Spending Variance = 228,000 (Adverse), Efficiency Variance = -132,000 (Adverse) - Fixed Overhead Budget Variance = 50,000 (Favorable), Volume Variance = 24,000 (Adverse)