QUESTION 5 (20 marks)

1. XY Inc. provides the following data for June 2019 when 13,000 Units are manufactured:

Standard Material Cost (Per Unit)

6.20 kg @ $ 10.25/kg

Actual Material Cost (Per Unit)

6.85 kg @ $ 13.8/kg

Standard Labor cost (Per Unit)

5.5 hrs @ $ 14/hr

Actual Labor cost (Per Unit) 5.30 hrs @ $ 15.2 /hr a) Calculate: (9 marks)

Direct Material Price Variance

Direct Material Quantity/Usage Variance

Total Material Cost Variance

Direct Labor Rate Variance

Direct Labor Efficiency Variance

Total Labor Cost Variance

(b)

Calculate Variable Overhead Spending Variance if actual labor hours used are 360, standard variable overhead rate is $11.40 per direct labor hour and actual variable overhead rate is

$10.30 per direct labor hour. Also specify whether the variance is favorable or unfavorable. (3 marks)

(c)

Calculate the variable overhead efficiency variance using the following figures: (3 marks)

Number of Units Produced

720

Standard Direct Labor Hours Per Unit

1.2

Actual Direct Labor Hours Used

360

Standard Variable Overhead Rate

$11.40

d)"Financial control measures are not Luxury but absolute necessity". Comment.

(5 marks,300words)