Perfect Pastry Place makes the best quality and most beautifully decorated cakes in town. Since
other bakeries also claim to have similar products, there is strict control on costs so that cakes are
sold to customers at the best price possible. Shown below are the standard costs for a butter cake.
$
Direct materials (1 kg bakers’ flour at $5 per kg) = 5.00
Direct labor (0.5 hours at $15 per hour) = 7.50
Variable overhead (0.5 hours at $20 per hour) = 10.00
Fixed overhead (0.5 hours at $10 per hour) = 5.00
Total standard cost per butter cake 27.50
Actual activity for the month, when 50 butter cakes were baked, resulted in the following:
$
Direct materials (55 kg) = 302.50
Direct labor (20 hours) = 400.00
Variable overhead 550.00
Fixed overhead 275.00
Compute the materials price variance. (4 marks)
2. Compute the materials quantity variance. (4 marks)
3. Compute the labor price variance. (4 marks)
4. Compute the labor quantity variance. (4 marks)
5. Compute the total overhead variance.
