REQUIREMENT:

Standard Costing and Variance Analysis

Task 1: CLO3

Sap Sdn. Bhd. is a wholesale manufacturer of tea products. It operates a variable costing system. Given below, is information relating to one of its products, i.e. bottled premium tea leaves-grade A, which is made in one of the company departments: -

Bottled premium tea leaves-grade AStandard variable product costUnit ($) Direct material (6 kilograms at $4 per kg)24 Direct labour(1 hour at $7 per hour)7 Variable production overhead (1 direct labour hour)3_34

Additional information - Variable production overhead varies with direct labour hours of input - Budgeted fixed production overhead per month is $100,000 - Budgeted production is 20,000 bottles per month

Actual production and costs for one of the months were as follows: Bottles produced18,500 bottles($) Direct materials purchased and used, 113,500kg442,650 Direct labour, 17,800 hours129,940 Variable production overhead incurred58,800 Fixed production overhead incurred104,000735,390

required

a. Material price variance

b. Material usage variance

c. Direct labour variance

d. Direct labour efficiency variance

e. Variable overhead spending variance

f. Variable overhead efficiency variance

g. Fixed overhead spending variance