Question

View Help Morry Games developed a new play station caled AWESOME. Morry Games has a standard cost system to help control its costs. The following standards have been established for AWESOME • Direct materials 15 grams per AWESOME. • Standard direct material cost per AWESOME is $10. Page 4 of 12 BUACC5033 Cost and Management Accounting Semester 1 2020 . Direct labour 12 hours per AWESOME • Standard cost of direct labour is $14.40 per AWESOME • During May the company produced 9,000 AWESOME units. . Production data for May are Direct materials 165,000 grams were purchased at a cost of $104,000 20,000 grams of this was still in inventory at the end of the month. • Direct labour. 11,400 direct labour hours were worked at a cost of $142,500 Required: (a) Calculate Direct materials price and quantity vanances (2.2 = 4 marks) Suggested Answer: (Or, you can use the given excel document to show your work for this question) (b) Calculate Direct labour price and quantity variances (2+2 - 4 marks) Suggested Answer: Cortape toate (Or, you can use the given excel document to show your work for this question) (c) Are the variances computed in (a) and (b) linked? Provide a brief commentary on the variances computed above, including explanations regarding the price and the nuantit variances for rent materials and the nice and the O Focus E

Answer 1

Calibri A A ab Wrap Text General an Paste B Copy Format Painter S B I U A Merge & Center - % Conditional Format as Cell Formatting" Table Styles Insert Delete Format Autosum - Z Fill- Sort Find Clear Filter Select Editing Clipboard Font Alignment Number Styles Cells K15 ✓ А" B C D E F G H - K 1 M 1 2 Direct Labour Rate Variance = ( Standard Rate - Actual Rate ) * Actual Hours paid 4 5 6 Standard Rate per labour hour = Standard Labour Cost per Awesome / Labour Hour per Unit = 14.40 / 1.2 = $ 12 Actual labour hours worked = 11,400 hours Actual Rate per labour hour = Actual Labour Costs / Actual Labour Hours = 142,500 / 11,400 =$ 12.95 Labour Price Variance = (12 - 12.95) * 11,400 = (0.95) * 11,400 = (10,830) Labour Price Variance = $ 10,830 Unfavourable 7 13 14 2 15 Direct Labour efficiency Variance = ( Standard Hours for Actual Output - Actual hours worked ) * Standrad Rate per Labour hour 16 17 18 19 Standard Rate per labour hour = $ 12 Actual labour hours worked = 11,400 labour hours Standard Hours for actual output = 9,000 units * 1.2 per hour = 10,800 hours Labour Efficiency Variance = (10,800 - 11,240) * 12 = (440) * 12 = (5,280) Labour Efficiency Variance = $ 5,280 Unfavourable ZZ 23 26 Sheet 404. Working Sheet 405 Sheet 406 Sheet 407 Sheeto + 1309 Ready

Clipboard Font Alignment Number Styles Cells Editing A1 X 1 А B С D E F H - к RU 1 Direct Materials Price Variance = ( Standard Rate - Actual Rate) * Actual Quantity of Material Consumed 2 4 5 6 Standard Rate per gram = $ 0.6667 per gram Actual Rate = Direct Material Costs/Total Quantity Purchased = 104,000 / 165,000 = $ 0.6303 per gram Actual Quantity of Material Consumed = 145,000 grams Material Price Variance = (0.6667 -0.6303) * 145,000 = 5,272.73 Material Price Variance = $5,272.73 Favourable 7 10 13 14 2 Direct Material Quantity variance = ( Standard Material for Actual Output - Actual material used) * Standard Rate 15 17 18 Standard Material for Actual Output = ( Actual Output * Standard material per unit) = 9,000 units * 15 gram per unit = 135,000 grams Actual Quantity of Material Consumed = 145,000 Grams Standard Rate per gram = $ 0.6667 per gram Material Quantity variance = (135,000 - 145,000) * 0.6667 = (10,000) * 0.6667 = (6,667) Material Quantity variance = $ 6,667 Unfavourable 19 20 23 26 1 Sheet 404. Working Sheet 405 Sheet 406 Sheet 407 Sheeto 13096 Ready

caiting A43 A B С D E F G H 1 26 K 3 27 28 Direct Materials Purchase Price Variance = ( Actual Rate - Standard Rate) * Actual Quantity of Material Purchased 29 30 31 Standard Rate per gram = $ 0.6667 per gram Actual Rate = Direct Material Costs / Total Quantity Purchased = 104,000 / 165,000 = $ 0.6303 per gram Actual Quantity of Material Purchased = 165,000 grams 32 33 34 Material Purchase Price Variance = (0.6303 - 0.6667) * 165,000 = (6,006) 35 36 37 Material Purchase Price Variance = $ 6,006 Unfavourable 38 39 40 41 42 43 Sheet 404. Working Sheet 405 Sheet 496 Sheet 407 Sheet6 Ready 13096

File Home Insert Page Layout Formulas Data Review View Help Tell me what you want to do & Share Calibri ab Wrap Text General X. Cut Copy Format Painter Ay O Paste BIU 1.1. A. EEEEEE Merge & Center - EF Insert Delete Format % Conditional Format as Cell Formatting Table Styles Styles AutoSum- Fill - Sort & Find & Clear Filter Select Editing Clipboard Font Alignment Number Cells Q15 X A В с D E F G H - J K M N O P Q Question C 2 3 We can say that Direct Material Variances and Direct Labour Variances can be related to eachother in a sense that when the cheaper or low quality materials are brought it sometimes lead to use of additional labour hours resulting in adverse labour variance. In the case given same is the case materials were available aat a lower rate but additional labour was to be used for that resulting in adverse labour variance. 4. 5 b 7 8 Direct Material Price Variance The Variance is Favorable because the actual rate of materials were lower than that budgeted due to which company has to pay less and result is favourable variance of $ 5272.73 9 10 11 12 Direct Material Quantity Variance The Variance is unfavorable because the actual quantity consumed is more than what was actually expected. As a result of this company has to pay more and there is a unfavorable variance of $ 6,667. 13 דן 15 16 Direct Labour Rate Variance The Variance is Unfavourable because the labour rate in actual were more than that expected of in the budget due to which it results in an adverse variance of $ 10,830. 17 19 20 21 Direct Labour Effcicency Variance Labour Effeciency Variance is unfavourable due to the consumption of more labour hours than the standards set by the company due to which the Quantity of Labour increased and resulting in a adverse variance. 22 Sheet 404. Working Sheet 405 Sheet 406 Sheet 407 Sheet6 Ready 12093