Semangat Bhd is a company that produces a special electrical equipment and parts. Semangat Bhd employs a standard cost accounting system with separate standards established for each product. A special transformer is manufactured in the Transformer Department. Production volume is measured by direct labor hours in this department and a flexible budget system is used to plan and control department overhead. Standard costs for the special transformer are determined annually in September for the coming year. The standard cost of a transformer was computed at RM 67.00 as shown below.

RM

Direct materials Iron 5 sheets@RM2 Copper 3 spools@RM3

10 9 Direct labour (4 hours @ RM 7 per hour) 28 Variable overheads (4 hours @ RM 3 per hour) 12 Fixed overheads (4 hours @ RM 2 per hour) 8 Total 67

Overhead rates were based upon normal and expected monthly capacity, both of which were 4,000 direct labor hours. Practical capacity for this department is 5,000 direct labor hours per month. Variable overhead costs are expected to vary with the number of direct labor hours actually used. During October, 800 transformers were produced. This was below expectations because a work stoppage occurred at the copper supplier and shipments were delayed.The following costs were incurred in October: Direct materials Iron : Purchased: 4,200 sheets, total cost RM 8,750 Used:4,200 sheets Copper : Purchased: 2,600 spools, total cost RM 7,890 Used:2,600 spools Direct labour : 3,400 hours Total payroll : RM 24,080 Overhead Variable : RM10,000 Fixed : RM 8,800

BAC502 MANAGEMENT ACCOUNTING 2 FEB-JUNE 2020 Final Assessment CONFIDENTIAL

Page 7 of 10 2020 Turn Over Required: Show the computations for the various variances: Material Variance Material Price Variance Material Usage Variance

(4 Marks)

Labour Variances Labour Rate Variances Labour Efficiency Variance

(5 Marks)

Variable Overhead Variances

Variable Overhead Expenditure Variance Variable Overhead Efficiency Variance

(8 Marks)

Fixed Overhead Variances

Fixed Overhead Volume Variance Fixed Overhead Expenditure Variance