Question
A. Safiyyah Sdn Bhd (SSB) manufactures women maxi dress for Malaysian market. It is a single product. The standard costs of materials and labor for
A. Safiyyah Sdn Bhd (SSB) manufactures women maxi dress for Malaysian market. It is a single product. The standard costs of materials and labor for productions are as follows: Items Costs Cloth (4 meters per dress) RM4.50 per meter Zip and button RM0.50 per set Lace RM1.50 per dress Production labor cost RM9.00 per dress Standard variable overhead cost is RM4 per dress (based on direct labor hours). Fixed overhead is budgeted at RM16,000 per month. In May 2020, the following data pertain to operations are as follows: Materials purchased: 8,000 units costing RM39,400 Materials used in production of 1,500 units of finished product: 6,200 units of materials Direct labor used: 1,500 hours costing RM15,000 Variable overhead costs incurred: RM5,960 Fixed overhead costs incurred: RM17,500 REQUIRED: (a) Analyze the following variances (show all workings): i. Materials usage variance (4 Marks) ii. Labor rate variance (2 Marks) iii. Variable overhead spending variance (2 Marks) iv. Fixed overhead budget variance (2 Marks) (b) Propose ONE (1) reason and ONE (1) possible solution for the unfavorable variances in part (a) i and iv above if you are the Production Manager for SSB. (4 Marks)
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