Assignment $1$

$100$ Marks

Due: $30$ August $2024$

Question $2$

Company XYZ uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. It's costing system for manufacturing has two direct $-$cost categories $($direct materials and direct manufacturing labour $-$ both variable$)$ and two overhead cost categories $($variable manufacturing overhead and fixed manufacturing overhead, both allocated using direct manufacturing labour hours$).$

At the $40000$ budgeted direct manufacturing labour hour level for August, budgeted manufacturing labour is R$800000,$ budgeted variable manufacturing overhead is R$480000$ and budgeted fixed manufacturing overhead is R$640000.$

The following actual results are for August:

Direct materials price variance $($based on purchases$)$

R$176000$F

Direct materials usage variance

R $69000$ U

Direct manufacturing labour costs incurred

R$522750$

Variable manufacturing overhead flexible budget variance

R $10350$ U

Variable manufacturing overhead efficiency variance

R $18000$ U

Fixed manufacturing overhead incurred

R$597460$

Fixed manufacturing overhead spending variance

R $42540$ F

The standard cost per kilogram of direct materials is R$11\mathrm{.}50.$ The standard allowance is $3$ kilograms for each unit of product. During August, $30000$ units were produced. There was no beginning inventory of direct materials. There was no beginning or ending work in process. In August, the direct materials price variance was R$1\mathrm{.}10$ per kilogram.

In July, labour unrest caused a major slowdown in the pace of production, resulting in an unfavourable direct manufacturing labour efficiency variance of R$45000.$ There was no direct manufacturing labour rate variance. Labour unrest persisted into August. Some workers quit. Their replacements had to be hired at higher wage rates, which had to be extended to all workers. The actual average wage rate in August exceeded the standard average rate by R$0\mathrm{.}50$ per hour.

Required:

$2\mathrm{.}1$ Calculate the following for August:

a$.$ Total kilograms of direct materials purchased

b$.$ Total number of kilograms of excess direct materials used

c$.$ Variable manufacturing overhead spending variance

d$.$ Total number of actual direct manufacturing labour hours used

e$.$ Total number of standard labour hours allowed for the units produced

f$.$ Production volume variance

$2\mathrm{.}2$ Using the General Journal, close off all the variances to Cost of Goods Sold.

Page break