Information relating to actual costs and variances for year 2019 is shown below. The budgeted production for
Question:
Information relating to actual costs and variances for year 2019 is shown below. The budgeted production for year 2019 was 42,000 products.
Actual data
Actual production | 43,200 products |
Direct materials costs:32,400 kg | RM162,000 |
Direct labour costs: 17,280 hours | RM217,728 |
Variable production overhead costs | RM108,000 |
Fixed production overhead costs | RM170,400 |
Variances
Direct material price variance | RM8,100 (F) |
Direct material usage variance | RM11,340 (F) |
Direct labour rate variance | RM1,724 (F) |
Direct labour efficiency variance | RM54,864 (F) |
Variable production overhead expenditure variance | RM864 (A) |
Variable production overhead efficiency variance | RM26,784 (F) |
Fixed production overhead variance | RM7,550 (A) |
The company operates a standard variable costing system.
REQUIRED
Using the information provided above, prepare:
(a) The standard cost card for one product.
(b) A flexible budget performance report showing the fixed budget, flexed budget, actual results and flexible budget variances for the year
(c) Do you agree or disagree with the following statement? Justify your answer with refer to part 3(a) and 3(b).
Flexible budget is useful for controlling purpose in an organization.
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil