XLY Fragrance Sdn Bhd produces a well-known perfume for women. The standard manufacturing cost of the perfume
Question:
XLY Fragrance Sdn Bhd produces a well-known perfume for women. The standard manufacturing cost of the perfume is as per the standard cost sheet illustrated below:
RM
Direct Materials:
Liquids (4.5oz @ RM 0.40)1.80
Bottles (1 @ RM 0.05) 0.05
Direct labor (0.2hr. @ RM 15.00) 3.00
Variable Overhead (0.2hrs @ RM 5.00) 1.00
Fixed Overhead (0.2hrs @ RM 1.50) 0.3
Standard Cost Per Unit 6.15
Management has decided to investigate only those variances that exceed RM 20,000.
During the last quarter, 250,000 four-ounce bottles of perfume were produced. Descriptions of the actual activity for the quarter is as follows:
a. A total of 1.35 million ounces of liquids was purchased, mixed and processed. The price paid per ounce average RM 0.42.
b. Exactly 250,000 bottles were used. The price paid for each bottle was RM 0.048.
c. Direct labor totaled 48,250, with a total cost of RM 733,000
The normal production volume for XLY Fragrance Sdn Bhd is 250,000 bottles per quarter. The standard overhead rates are computed by using the normal volume. All overhead cost is incurred uniformly thought-out the year.
Required
- Compute the total material variance for liquid.
- Compute the material price variance for liquid.
- Compute the material quantity variance for liquid.
- Compute the total material variance for bottle.
- Compute the material price variance for bottle.
- Compute the material quantity variance for bottle.
- Compute the total labor variance
- Compute the labor price variance
- Compute the labor quantity variance.
- Which of these variances would be investigated?
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen