QUESTION $3(25$ MARKS$)$

Artisan Bags $\backslash$$dn$,$ Bhd$.$ produces leather bags called 'Elegance'. As a management accountant in the Cost Control Department, Encik Halim is required to prepare a variance analysis of the performance of 'Elegance' for the month of June $2024.$

The following are the budgeted data for the month ending $30$ June $2024$:

Budgeted production and sales of 'Elegance' is $10,000$ units per month. Variable overhead is absorbed based on direct labour hour whereas fixed overhead is absorbed based on units produced.

Below are the actual results for the month of June $2024$:

Required:

a$)$ Compute the following variances and indicate whether each is favourable $($F$)$ or adverse $($A$)$:

i$.$ Direct material price variance

ii$.$ Direct material usage variance

iii. Direct labour rate variance

$(3$ marks$)$

$(3$ marks$)$

iv$.$ Labour labourefficiency variance

$(3$ marks$)$

v$.$ Variable production overhead expenditure

vi$.$ Sales price variance

$(3$ marks$)$

$(3$ marks$)$

b$)$ State TWO $(2)$ reasons for material price variance and TWO $(2)$ reasons for labour efficiency variance.

c$)$ Describe any THREE $(3)$ characteristics of ideal standards.