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$21 000 using machine hours as a basis (traditional approach).
|*Budgeted production volume (tennis balls)||860||1 040|
*The actual production volume for June 2020 was in line with the budgeted production figures.
The standard requirement per tennis ball are as follows:
|Direct material: Rubber (grams)||49||50|
|Direct material: Fabric cover (grams)||9||6|
|Direct labour (minutes)||18||15|
|Overall machine time (minutes)||30||30|
BUDGETED DATA FOR JUNE 2020
|Sales volume (number of balls)||800||1 000|
|Selling price per ball (N$)||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
|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.
Calculate the sales volume contribution variance per tennis ball for Antelope in June 2020.