Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question KokoLat Sdn. Bhd. is a manufacturer of premium cocoa beans. KokoLat budgeted 20,000 bottles to be produced per month. The standards below have been

Question

KokoLat Sdn. Bhd. is a manufacturer of premium cocoa beans. KokoLat budgeted 20,000 bottles to be produced per month. The standards below have been established for its variable costs of production.

Premium cocoa beans

Standard cost per unit

(RM)

Direct material

(6 kgs at RM4 per kg)

Direct labour

(1 hour at RM7 per hour)

Variable production overhead

(1 direct labour hour at RM3)

24

7

3

34

In July, 18,500 bottles were produced. A total of 113, 500 kgs for the costs of RM442,650 of direct materials were purchased and used. The direct labour costed RM129,940 for a total of 17,800 direct labour hours worked. Actual variable production overhead costs incurred was RM58,800.

Required:

From the foregoing information, compute the following variances and indicate whether they are favorable (F) or unfavorable (U). State why each of the variances occurred.

  1. Material price variance (4 marks)
  2. Material usage variance (4 marks)
  3. Direct labour rate variance (4 marks)
  4. Direct labour efficiency variance (4 marks)
  5. Variable overhead spending variance (4 marks)
  6. Variable overhead efficiency variance (4 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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_2

Step: 3

blur-text-image_3

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

Cornerstones of Managerial Accounting

Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman

2nd Canadian edition

978-0176721237, 978-0176530884

More Books

Students also viewed these Accounting questions