Irfan Gadget Sdn
Bhd manufactures products for children and babies. Below is the budgeted cost
information of one of its products which is baby car seat for the month of July
2018 based on the budgeted production and sales of 4,000 units.
RM
Direct material:
Welding rods
(12,000 kg) 240,000
Fabrics (8,000
meters) 80,000
Direct labour
(8,000 hours) 160,000
Variable overhead 80,000
Fixed overhead 40,000
The variable
overhead cost is absorbed based on direct labour hours while the fixed overhead
cost is absorbed based on number of units produced. The standard selling price
of the baby car seat is RM200 per unit.
The actual data for
the month is as follows:
Units produced and sold 5,000
Selling price per unit RM180
Direct material:
Welding rods purchased and
used 12,500 kg@ RM18 per kg
Fabrics purchased and used 8,750 meters @ RM8 per meter
Direct labour 10,000
hours @ RM15 per hour
Variable overhead cost RM100,000
Fixed overhead cost RM40,000
Required:
a.
Prepare
a standard cost for one unit of baby car seat.
b.
Analyse
the following:
i)
Direct
material price variance for welding rods
ii)
Direct
material usage variance for fabrics
iii)
Direct
labour rate variance
iv)
Direct
labour efficiency variance
v)
Variable
overhead expenditure variance
vi)
Variable
overhead efficiency variance
vii)
Fixed
overhead expenditure variance
viii)
Fixed
overhead volume variance
ix)
Sales
margin price variance
x)
Sales
margin volume variance
c. Construct
a statement reconciling budgeted profit and actual profit for the month of July
2018 assuming Irfan Gadget Sdn Bhd has the following additional variances:
i.
Direct
material usage variance of RM50,000 (F) for welding rods.
ii.
Direct
material price variance of RM17,500 (F) for fabrics.
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