Question
Razi Company is a manufacturer of the leather belt based in Kelang, Selangor. The company estimated a total of 400 units of production for the most recent period. The standard costs per unit are given below:
Leather Belt
Standard cost per unit (RM)
Direct material
(2m at RM1.50 per meter)
Direct labour
(1.5 hours at RM6 per hour)
Variable production overhead
(1.5 hours at RM3.40)
3.00
9.00
5.10
17.10
The budgeted and actual units produced for this period were 400 units. The following is the actual costs incurred per unit.
Actual cost per unit (RM)
(2.1m at RM1.60 per meter)
(1.4 hours at RM6.50 per hour)
(1.4hours at RM3.10)
3.36
9.10
4.34
16.80
Required:
From the foregoing information, compute the following variances and indicate whether they are favorable (F) or unfavorable (U). State why each of the variances occurred.
a.Material price variance
b.Material usage variance
c.Direct labour rate variance
d.Direct labour efficiency variance
e.Variable overhead spending variance
f. Variable overhead efficiency variance
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