management accounting

QUESTION 1 25 MARKS NAMTEX, a textile company manufactures a range of beddings for a number of retailers across the country. One of its popular design is the Egyptian winter blanket that is commonly used in government run hospitals and prisons. A recent minor adjustment to GRN standards on bed sizes prompted Namtex to review the design of the Egyptian winter blanket to incorporate extended corners. The new blanket now requires 5.5 meters of materials, this is 0.5 meter more materials than what the previous design required. The material cost N$ 35.00 per meter and bulk purchases of 15 000 meters or more attracts a 15% discount from the suppliers. The new design now means a more complex sewing pattern has to be done using an entirely new sewing technique. As a result, all staff members would need to be trained before they could begin production. The sewing department supervisor estimated that it will now take 40 minutes per blanket as compared to the 30 minutes it took to complete the old design. Namtex employs 50 staff members whom each works 160 hours a month and are remunerated at N$ 25.00 per hour. The production manager at Namtex is solely responsible for all the purchasing and production matters. Namtex uses standard costing system. Normally, after every design change has taken place, the standard cost card is revised. However, the Management Accountant who is responsible for this task had left the company for greener pastures, making the standard cost card not revised since his departure. Following are the data for the month of November 2020: Materials purchased and used 110 000 meters (bulk order placed) Budgeted production 20 000 blankets Actual production 18 000 blankets Actual labour cost for November is N$ 260 000. The production manager reported that there was no idle time during November. REQUIRED MARKS 1.1 Calculate the direct material variances 1.2 Calculate the direct labour variances 6 1.3 Evaluate the performance of the production manager for the month of November in 13 as much details as the information allows. TOTAL MARKS FOR QUESTION 1 25