Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

King Limited operates a standard absorption costing system. During last month, it made only one product, the LION2. The following information is known about

image text in transcribed 

King Limited operates a standard absorption costing system. During last month, it made only one product, the LION2. The following information is known about LION2: Standard cost (for one unit of LION2): Direct materials Direct labour Variable overhead Fixed overhead Standard cost Standard profit margin cost ($) 4kg $/kg: 4 3hours $/hour: 7 3hours $/hour: 3 3hours $/hour: 4 FeNR N Standard selling price Budgeted output and sales for last month: 800 units Actual results for last month (700 units of LION2 produced and sold) cost ($) Direct materials used 3 100kg $/kg: 4,25 13 175 Direct labour worked 2 350hours $/hour: 6,4 15 040 Variable overhead 6 700 Fixed overhead 9 200 Sales revenue 700units price / unit ($): 79 55 300 Required: a. Calculate direct material price and usage variances, and the total material variance for the last month. b. Calculate direct labour rate and efficiency variances, and the total labour variance for the last month. c. Suggest possible reasons for these variances.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a Direct Material Variances 1 Direct Material Price Variance Standard Price per kg 4 Actual Price pe... blur-text-image

Get Instant Access to Expert-Tailored 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

Managerial Accounting Decision Making and Performance Management

Authors: Ray Proctor

4th edition

273764489, 978-0273764489

More Books

Students also viewed these Accounting questions

Question

7:14 pm Sun 21 Mar Answered: 1 week ago

Answered: 1 week ago

Question

Describe how stocks are bought and sold in the secondary market?

Answered: 1 week ago