Question
3. Kekotak Sdn. Bhd. has the following standard cost for its product, Boxx: Direct material 5 metres X RM28 per unit Direct labour 6.5 hours
3. Kekotak Sdn. Bhd. has the following standard cost for its product, Boxx: Direct material 5 metres X RM28 per unit Direct labour 6.5 hours X RM33 per hour Additional information for the month of November 2020 is as follows: Units made 1,300 units Direct material bought 2,450 metres for RM63,700 Direct material used 7,100 metres Direct labour 6,300 hours (direct labour cost of RM195,300) Based on the information given, you are required to: a) Provide the formula and calculate each of the following variances. Then, determine whether each of them is Favourable (F) or Unfavourable (U): i) direct material price variance; ii) direct material quantity variance; iii) direct labour rate variance; and iv) direct labour efficiency variance. (3) (3) (3) (3) b) Discuss the reasons for favourable direct labour efficiency variance to occur. (4) c) Explain the usefulness of variance analysis to the management of Kekotak Sdn. Bhd. (4)
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