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The cost incurred for this period is as follows:
5000 Compared to expected cost
Direct Materials 110,000 +10,000
Direct Labour 70,000 +7,500
Power 18,000 SAME
Repairs 30,000 +7,500
Supervision 20,000 +4,000
Rent and rates 8,000 -1000
Insurance 17,500 SAME
Total 273,500 +28,000
2.2 Potential Reasons for variations:
O Due to an increase in repairs by ?7,500, the cost of material is going to increase. This is shown as an increase of ?10,000. Because more work is carried out through higher repairs more labour and supervision costs are also incurred at ?7,500 for labour and ?4,000 for supervision...
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