Question

Sap Sdn. Bhd. is a wholesale manufacturer of tea products. It operates a variable costing system. Given below, is information relating to one of its products, i.e. bottled premium tea leaves-grade A, which is made in one of the company departments: - Bottled premium tea leaves-grade A Standard variable product cost Unit (RM) Direct material (6 kilograms at RM4 per kg) Direct labour (1 hour at RM7 per hour) Variable production overhead (1 direct labour hour) Additional information - Variable production overhead varies with direct labour hours of input - Budgeted fixed production overhead per month is RM100,000 - Budgeted production is 20,000 bottles per month Actual production and costs for one of the months were as follows: Bottles produced 18,500 bottles (RM) Direct materials purchased and used, 113,500kg 442,650 Direct labour, 17,800 hours 129,940 Variable production overhead incurred 58,800 Fixed production overhead incurred 104,000 735,390

Answer 1

Actual Cost AQ АР SP SP AQ 113500 Standard Cost SQ X 111000 x 444,000 113500 3.9 442,650 454,000 11,350 10,000 Direct Material Price Variance Direct Material usage Variance Total Direct Material Variance 11,350 (F) 10,000 (UF) 1,350 (F) Actual Cost AH SR SR XAR 7.30 129,940 AH 17800 17800 X x 124,600 Standard Cost SH X 18500 X 129,500 7 5,340 4,900 Direct Labor Rate Variance Direct labor rate Efficiency Variance Total Direct Labor Variance 5,340 (U) 4,900 (F) 440 (U)

Actual Cost AH SR AR 5.84 AH 17800 17800 X x 89,000 104,000 15,000 Fixed Cost Spending Variance 15,000 (UF) Variable Overhead Variance Actual Cost AH SR SR AR 3.30 AH 17800 X x 53,400 Standard Cost SH X 18500 X 55,500 17800 3 58,800 5,400 2,100 Variable Overhead Spending Variance Varable Overhead Efficiency Variance Total Variable Overhead Variance 5,400 (UF) 2,100 (F) 3,300 (UF)