Question
Sinary Maju Sdn. Bhd. is a manufacturing company that produces plastic ware product. This company operates a variances accounting system. Each unit of the product
Sinary Maju Sdn. Bhd. is a manufacturing company that produces plastic ware product. This company operates a variances accounting system. Each unit of the product has the following standard requirements:
Description | Quantity | Price per unit | RM |
Direct material | 20 kgs | RM2 per kg | 40 |
Direct labour | 10 hours | RM5 per hour | 50 |
Variable overhead | 10 hours | RM3 per hour | 30 |
Annual budgeted fixed overhead are RM864,000. Budgeted production of plastic ware product is 1,800 units.
The following actual data was recorded at the end of the May 2020:
Unit produced | 1,500 units |
Material used | 29,800 kgs at RM1.80 |
Direct labour | 14,900 hours at RM5.50 |
Variable overhead | RM44,000 |
Fixed overhead | RM69,600 |
Manufacturing overhead is charge on the basis of direct labour hours.
Required:
Compute the following variances for May 2020 and indicate whether each is favourable (F) or unfavourable (UF):
(a) Direct material price.
(
(b) Direct material usage.
(c) Direct labour rate.
(d) Direct labour efficiency.
(e) Variable overhead expenditure.
(f) Variable overhead efficiency.
(g) Fixed overhead efficiency.
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