The plant of Oh So Heavenly Company produces a moisturizing lotion. At the beginning of the...

 

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The plant of Oh So Heavenly Company produces a moisturizing lotion. At the beginning of the year the plant had the following standard cost sheet: Direct materials (10 kg @ R16) Direct labour (0.75 hours @ R180) Fixed overhead (0.75 hours @ R40) Variable overhead (0.75 hours @ R30) Total The plant calculates its overhead rates using practical volume, which is 72 000 units. The actual results for the year are as follows: a. Units produced b. Direct C. d. e. f. materials R160 R135 R30 R22.50 R347.50 purchased Direct materials used Direct labour Fixed overhead Variable overhead 70 000 744 000 kg @ R15 per kg 736 000 kg 56 000 hours @ R179 per hour R2 140 000 R1 754 000 Required: Calculate the following: 2.1 Calculate the direct materials price and usage variances. Calculate the direct labour rate and efficiency variances. 2.2 2.3 Calculate the fixed overhead spending and volume variances. Interpret the volume variance. 2.4 Calculate the variable overhead spending and efficiency variances. Assignment 1 2.5 Prepare journal entries for the following: The purchase of direct materials The issuance of direct materials to production The addition of labour to Work in Process a. b. C. d. e. f. Marks: 100 Question 3 The addition of overhead to Work in Process The incurrence of actual overhead costs Closing off of variances to Cost of Goods Sold The plant of Oh So Heavenly Company produces a moisturizing lotion. At the beginning of the year the plant had the following standard cost sheet: Direct materials (10 kg @ R16) Direct labour (0.75 hours @ R180) Fixed overhead (0.75 hours @ R40) Variable overhead (0.75 hours @ R30) Total The plant calculates its overhead rates using practical volume, which is 72 000 units. The actual results for the year are as follows: a. Units produced b. Direct C. d. e. f. materials R160 R135 R30 R22.50 R347.50 purchased Direct materials used Direct labour Fixed overhead Variable overhead 70 000 744 000 kg @ R15 per kg 736 000 kg 56 000 hours @ R179 per hour R2 140 000 R1 754 000 Required: Calculate the following: 2.1 Calculate the direct materials price and usage variances. Calculate the direct labour rate and efficiency variances. 2.2 2.3 Calculate the fixed overhead spending and volume variances. Interpret the volume variance. 2.4 Calculate the variable overhead spending and efficiency variances. Assignment 1 2.5 Prepare journal entries for the following: The purchase of direct materials The issuance of direct materials to production The addition of labour to Work in Process a. b. C. d. e. f. Marks: 100 Question 3 The addition of overhead to Work in Process The incurrence of actual overhead costs Closing off of variances to Cost of Goods Sold

Answer rating: 100% (QA)

SOLUTION 21 Direct Materials Variances a Direct Materials Price Variance Standard Cost of Direct Materials 10 kg R16 R160 Actual Quantity of Direct ... View the full answer