Question

In: Accounting

Sinary Maju Sdn. Bhd. is a manufacturing company that produces plastic ware product. This company operates...

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.

(h) Briefly explain TWO (2) possible causes of the direct labour rate variance that you have calculated above.

Expert Solution

ekkarill92 answered 2 years ago

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