QUESTION 3 a. Swift Fly Airlines has received an offer from Breadbox Bakery to supply the...
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QUESTION 3 a. Swift Fly Airlines has received an offer from Breadbox Bakery to supply the in-flight desserts for RM 0.21 each. The following are Swift Fly Airlines current cost for desserts: Variable costs: Direct material Direct labour RM 0.06 0.04 0.04 Variable overhead Fixed costs: Supervisory salaries 0.04 Depreciation of equipment 0.07 Total cost per dessert 0.25 Calculate the savings of the outsourcing and make the decision for Swift Fly Airlines. (10 marks) b. Geofff has budgeted to use RM 72,000 direct materials in October. When confirmation is available in November, Geoff discovers that the actual expenditure was RM 75,000. Calculate the total direct materials variance for October. (5 marks) QUESTION 3 a. Swift Fly Airlines has received an offer from Breadbox Bakery to supply the in-flight desserts for RM 0.21 each. The following are Swift Fly Airlines current cost for desserts: Variable costs: Direct material Direct labour RM 0.06 0.04 0.04 Variable overhead Fixed costs: Supervisory salaries 0.04 Depreciation of equipment 0.07 Total cost per dessert 0.25 Calculate the savings of the outsourcing and make the decision for Swift Fly Airlines. (10 marks) b. Geofff has budgeted to use RM 72,000 direct materials in October. When confirmation is available in November, Geoff discovers that the actual expenditure was RM 75,000. Calculate the total direct materials variance for October. (5 marks)
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