Question
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.
- Material price variance (4 marks)
- Material usage variance (4 marks)
- Direct labour rate variance (4 marks)
- Direct labour efficiency variance (4 marks)
- Variable overhead spending variance (4 marks)
- Variable overhead efficiency variance (4 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started