4. What are the disadvantages of marginal costing?

5. What is the purpose of the limiting factor method, and give TWO examples of which resources could be limited?

6. The following details are available for the direct materials used by for one unit made by LMN Ltd: -

Unit Cost

Materials (8kg x $0.80/kg) $6.40

In the last period, budgeted production was 850 units and actual production was 870 units. Materials purchased and used in the period was 8,200kg and cost $6,888.

Which of the following correctly states the material price and material usage variances for the period?

A. $286 (A) $992(A)

B. $328(A) $1,120(A)

C. $286(A) $1,120(A)

D. $328(A) $992(A)

7. Which TWO of the following is a probable causes of an adverse labor efficiency variance?

A. The original budgeted hours were set too low.

B. The employees were more skilled than had been planned for.

C. Sales units were lower than budgeted.

D. A lower quality of material was used.