Answered step by step
Verified Expert Solution
Question
1 Approved Answer
help me ls asap QUESTION TWO Special Ice Water Ltd is a manufacturer of various products including one that is marketed as Pure- Aqua. The
help me ls asap
QUESTION TWO Special Ice Water Ltd is a manufacturer of various products including one that is marketed as Pure- Aqua. The company has developed standard costs for one bottle of Pure-Aqua, as follows: Standard Standard quantity Standard price or rate cost Direct materials 84.00 7 litres 5 hours Direct labour 12.00 per litre 14.50 per hour 4.40 per hour 72.50 5 hours Variable manufacturing overhead Total standard cost 22.00 178.50 [CONTINUED] BEI13-5-SP/4 During the month of May, the following activity was recorded by the company in relation to the production of Pure-Aqua: - Materials purchased were 32,000 litres at a cost of 390,400. - There were no beginning stocks of materials on hand to start the month. At the end of the month, 2,400 litres of materials remained unused in the warehouse. - - The company employs 70 skilled workers to work on the production of Pure-Aqua, During May, each of them worked an average of 300 hours at an average rate of 15 per hour. Variable manufacturing overhead is assigned to Pure-Aqua on the basis of direct labour- hours. Variable manufacturing overhead costs incurred during May totalled 93,450. During May, 4,250 bottles of Pure-Aqua were produced. Required: (a) Compute the following variances for May: - Direct material price and quantity variances. Direct labour rate and efficiency variances. - Variable overhead spending and efficiency variances. (24 Marks) (b) Identify two possible reasons for each of the variances that you have computed above. (12 Marks) (c) Explain what is meant by the term "management by exception and critically evaluate the usefulness of standard costs in facilitating this process. (14 Marks) [TOTAL: 50 MARKS] Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started