Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi, can you help me with step by step calculation of this question? Su's Plastics Company manufactures a single product, Jasmain. The standard cost specification

Hi, can you help me with step by step calculation of this question?

image text in transcribedimage text in transcribed
Su's Plastics Company manufactures a single product, Jasmain. The standard cost specification sheet shows the following standards for one unit of Jasmain: 4 kg of material X @ $12 per kg $48 3 hours of direct labour @ $10 per hour $30 Fixed Overhead - $5 per direct labour hour $15 Variable Overhead - $2 per direct labour hour $ 6 The fixed overhead allocation rate is based on normal monthly capacity of 15000 direct labour hours. Fixed overhead and production are expected to be spread evenly throughout the year. A total of 5500 Jasmains were produced during July. Actual costs incurred during July were: 25000 kg of material X were purchased @ $12.50 per kg 21000 kg of material X were used. 18000 direct labour hours were worked at an average wage rate of $11 per hour Actual overhead incurred: Fixed $80 000 Variable $34 000 Su's Plastics has computed the following variances:Su's Plastics has computed the following variances: Direct material price variance = $12500 Unfavourable Direct material quantity variance= $12000 Favourable Direct labour rate variance = $18000 Unfavourable Direct labour efficiency variance = $15,000 Unfavourable Required: (a) Critically evaluate the performance of Su's Plastics. Include a discussion of the possible cause of each of these variances and provide recommendations regarding any actions that the company should take. (6 marks) (b) How can managers create budgetary slack? Provide two (2) reasons why managers may create budgetary slack

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett

9th edition

1118608224, 1118608227, 730323994, 9780730323990, 730319172, 9780730319177, 978-1118608227

Students also viewed these Accounting questions