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The following are the budget and actual figures for a period: RM RM Budget: Sales 260,000 (20,000 units @ RM13.00) Production 20,000 units Production costs:
The following are the budget and actual figures for a period: RM RM Budget: Sales 260,000 (20,000 units @ RM13.00) Production 20,000 units Production costs: Direct materials 61,200 (12,000kg @ RM5.10) Direct labour 69,700 (8,200 hours @ RM8.50) Fixed overhead 48,000 (20,000 units @ RM2.40) 178,900 Gross profit 81,100 Actual: Sales 257,800 (19,600 units) Production 20,400 units Production costs: Direct materials 62,496 (12,440 kg) Direct labour 70,227 (8,262 hours) Fixed overhead 48,160 180,883 Increase in inventory (at standard) (7,156) 173,727 Gross profit 84,073 Required: (a) Calculate the following variances: (i) Sales volume profit (ii) Selling price (iii) Direct material price (iv) Direct material usage (v) Direct labour efficiency (vi) Direct labour rate (vii)Fixed production overhead volume (16 marks) (b) Suggest a possible reason for direct material price, direct material usage, direct labour efficency and direct labour rate variances that calculated in (a). (4 marks)
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