Ondunga Ball (Pty) Ltd currently makes use of a direct costing system. The company manufactures and sells two types of tennis balls, Donkey and Antelope.
Total budgeted fixed manufacturing overhead costs for June 2020 amounted to N$21 000 using machine hours as a basis (traditional approach).
| Donkey | Antelope | |
| *Budgeted production volume (tennis balls) | 860 | 1 040 |
*The actual production volume for June 2020 was in line with the budgeted production figures.
STANDARD REQUIREMENTS
The standard requirement per tennis ball are as follows:
| Donkey | Antelope | |
| Direct material: Rubber (grams) | 49 | 50 |
| Direct material: Fabric cover (grams) | 9 | 6 |
| Direct labour (minutes) | 18 | 15 |
| Overall machine time (minutes) | 30 | 30 |
BUDGETED DATA FOR JUNE 2020
| Deuce | Ace | |
| Sales volume (number of balls) | 800 | 1 000 |
| Selling price per ball (N$) | 40 | 35 |
| Direct raw material: Rubber (per gram) | 16c | 16c |
| Direct raw material: Fabric cover (per gram) | 8c | 8c |
| Direct labour recovery rate (per direct labour) | N$20 | N$20 |
| Variable overhead recovery rate (per direct labour) | N$2 | N$2 |
ACTUAL DATA FOR JUNE 2020
| Donkey | Antelope | |
| Sales volume (number of units) | 860 | 1 040 |
| Actual sales | N$33 540 | N$39 520 |
| Purchased and used direct raw material: Rubber – 90 kg for N$13 500 |
| Purchased and used direct raw material: Fabric cover – 10.8kg for N$7 020 |
| Direct labour rate: N$18 per direct labour hour |
| Variable overhead rate: N$1.80 per direct labour hour |
| Total fixed manufacturing overheads N$25 000 |
JULY 2020 BUDGET
The production manager has the following information available for July 2020:
- The budgeted units to be produced for July 2020 is 930 Donkey tennis balls and 1 260 Antelope tennis balls respectively.
- The required minutes per product in terms of direct labour will remain the same as in June 2020.
- The contribution per Donkey tennis ball will be N$30.36 and the contribution per Antelope tennis ball will be N$27.62.
Required:
Calculate the sales volume contribution variance per tennis ball for Antelope in June 2020.
1 Answer