Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Ebonie Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated

image text in transcribed
The Ebonie Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labour-hours (DLH). At the beginning of 2022/2023, Ebonie adopted the following standards for its manufacturing costs: Standards Input Cost per Output Unit Direct Materials 3.00 kg at S 5.00 per kg $ 15.00 Direct Manufacturing Labour 5.00 hrs at 15.00 per hr $ 75.00 Manufacturing Overhead Variable $ 6.00 per DLH $ 30.00 Fixed 8.00 per DLH $ 40.00 Standard Manufacturing Cost per Unit $ 160.00 The denominator level for total manufacturing overhead per month in 2022/2023 is 40,000 direct manufacturing labour-hours. Ebonie Manufacturing's flexible budget for January 2023 was based on this denominator level. The records for January indicated the following: Actual Costs Direct Materials Purchased 25,000.00 kg 5.20 per kg Direct Materials Used 23,100.00 kg Direct Manufacturing Labour 40,100.00 Hours 14.60 per hr Total Actual Manufacturing Overhead (Variable & Fixed) $ 600,000.00 Actual Production 7,800.00 Output Units Required 1 Prepare a schedule of total standard manufacturing costs for the 7800 output units in January. [2 marks] 2 For the month of January 2023, calculate the following variances, indicating whether each is favourable (F) or unfavourable (U), in good format with workings: Direct materials price variance, based on purchases Direct materials efficiency variance Direct manufacturing labour price variance 0-0 0050 Direct manufacturing labour efficiency variance Total manufacturing overhead spending variance Variable manufacturing overhead efficiency variance Production-volume variance. [8 marks] ACCM4100 Page 3 Assignment Document classification: Internal K 3 Discuss at least 2 possible reasons for each of the above variances. [8 marks] 4 Explain the importance of performing variance analysis as part of the management accounting function? [6 marks] 5 Explain how management will use the results of this variance analysis. [6 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

Step: 3

blur-text-image

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

Capital Theory And Political Economy Prices, Income Distribution And Stability

Authors: Lefteris Tsoulfidis

1st Edition

1351239414, 9781351239417

More Books

Students also viewed these Economics questions

Question

What is a futures contract?

Answered: 1 week ago

Question

Identify the domain, range, int f(x)=6((1)/(2))^(x)

Answered: 1 week ago

Question

8. What values do you want others to associate you with?

Answered: 1 week ago