Pikachu Corp. produces and sells one type of metal casting. For the month ended 31 January 2020 the following information had been established:

Production and sales1,100 castings

RevenueRM70,950

Material used33,600 kg at a total cost of RM20,832

Labour hours worked1,820 hours at a total cost of RM14,742

Variable production overhead incurred RM10,500

Fixed production overhead incurredRM15,500

The following standard and budgeted information is also available:

Standard material cost per casting30 kg at a standard price of RM0.60 per kg

Standard labour hour per casting1.75 hours at a standard rate of RM8.00 per hour

Variable production overheadRM6.00 per hour

Fixed production overheadRM9.00 per hour

Budgeted fixed production overheadRM189,000 per year

Budgeted production and sales1,000 castings per month

Budgeted unit selling priceRM64

Required:

a)Calculate ALL variances and prepare and operating statement for the month ending 31 January 2020

b)Critically evaluate the importance of setting standards in management accounting.