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TUTORIAL 11: Standard Costing & Variance Analysis 2 Answer All Questions Given. Exercises

This document provides an example and exercises for a management accounting tutorial on standard costing and variance analysis. The first exercise asks students to (i) calculate the standard cost of a bottle of adhesive, (ii) compute relevant variances based on actual production and sales figures, (iii) explain possible reasons for material and labor variances, and (iv) explain the relationship between variable overhead and direct labor efficiency variances. The second exercise asks students to (i) calculate variances based on standard and actual figures for production of wooden study tables, and (ii) critically discuss one possible cause of material, labor rate, and labor efficiency variances in relation to the current economic situation.

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XIN HUI CHUAH
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153 views3 pages

TUTORIAL 11: Standard Costing & Variance Analysis 2 Answer All Questions Given. Exercises

This document provides an example and exercises for a management accounting tutorial on standard costing and variance analysis. The first exercise asks students to (i) calculate the standard cost of a bottle of adhesive, (ii) compute relevant variances based on actual production and sales figures, (iii) explain possible reasons for material and labor variances, and (iv) explain the relationship between variable overhead and direct labor efficiency variances. The second exercise asks students to (i) calculate variances based on standard and actual figures for production of wooden study tables, and (ii) critically discuss one possible cause of material, labor rate, and labor efficiency variances in relation to the current economic situation.

Uploaded by

XIN HUI CHUAH
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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UBAM3013 MANAGEMENT ACCOUNTING

MAY 2022 Tutorial

UNIVERSITI TUNKU ABDUL RAHMAN


FACULTY OF BUSINESS AND FINANCE

ACADEMIC YEAR 2022/2023


TRIMESTER MAY 2022

BACHELOR OF BUSINESS ADMINISTRATION (HONS)


BACHELOR OF FINANCE (HONS)

TUTORIAL 11: Standard Costing & Variance Analysis 2


Answer all questions given.

Exercises:

1. Sunthight Sdn. Bhd. produces various adhesive products for office, factory
and home uses. One of its highly demanded products is Polygum adhesive.
The company has developed standard cost for one bottle of Polygum as
follows:

Standard Standard price


quantity
Direct material 2.5 ml 15.00 per ml
Direct labor 1.4 hours 10.50 per hour
Variable manufacturing 3.50 per hour
overhead

The standard selling price for each bottle of Polygum is RM68. A total of 3,800
units and 3,550 units of the product were expected to be produced and sold
respectively. The company uses a standard absorption costing system. Total
manufacturing overhead costs were estimated at RM34,580 on the basis of
5,320 direct labor hours.

During April, the following activities and costs were recorded in relation to
production of Polygum:

1. Manufacturing overhead is assigned to Polygum on the basis of direct


labor hours. Variable and fixed manufacturing overhead costs during
April was RM16,981.25 and RM14,000 respectively.
2. During April, 3,750 bottles of Polygum were produced and 3,500
bottles were sold at RM241,500.
3. Materials purchased were 10,000 ml at a cost of RM149,500. However
only 9,500 ml were used during the period.
4. The company worked 5,225 labour hours at a rate of RM11 per hour.
UBAM3013 MANAGEMENT ACCOUNTING
MAY 2022 Tutorial

Required:

(i) Determine the standard cost of one bottle Polygum.


(ii) Compute all relevant variances.
(iii) Refer to answer in (ii), explain ONE (1) possible reason for each of the
material and labor variances.
(iv) Explain the relation between variable overhead efficiency and direct
labor efficiency variances.

2. SA Limited operates a standard cost accounting system. SA Limited


manufactures a wooden study table for kid. The following information has
been extracted from its standard cost card. One unit of wooden study table
with a standard cost of RM30 made up as follows:

RM
Direct material ( 2.5 metres at RM5 per metre ) 12.50
Direct labour ( 3.5 hours at RM3 per hours ) 10.50
Variable manufacturing overhead ( 3.5 hours at RM1.20 per 4.20
hour )
Fixed overhead ( 3.5 hours at RM0.80 per hour ) 2.80
30.00

The standard selling price of the wooden table unit is RM45. The monthly
budget of production is 2,500 units whereas sales at 2,250 units. Actual
figures for the month of April 2022 are as follows:
1) The total sales and production are at 2,450 units and 2,900 units
respectively.
2) Direct materials 7,350 metre were purchased and 7,300 metre were
used at RM5.50 per metre.
3) 10,200 direct labour at RM2.90 per hour.
4) Variable overhead and fixed overhead cost at RM12,000 and RM6,900
respectively.

Required:
UBAM3013 MANAGEMENT ACCOUNTING
MAY 2022 Tutorial

(i) Compute all relevant variances inclusive material, labour, variable and
fixed overhead.
(ii) By linking to the current economic situation, critically discuss ONE (1)
possible cause of material price, labour rate and labour efficiency variances in
(i).

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