Head of Plant Network Planning Essay

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ANSWER SCHEME BMAC5203/JAN2012/F COURSE CODE: BMAC5203 COURSE NAME: ACCOUNTING FOR DECISION MAKING JANUARY 2012 FINAL EXAMINATION ANSWER SCHEME PART A INSTRUCTIONS: 1. THERE ARE TWO (2) QUESTIONS IN THIS PART. 2. ANSWER BOTH QUESTIONS. Question 1 Apex Sdn Bhd designs and manufactures special decorative porcelain vases. A highly sophisticated machinery was purchased for the production of the vases. department established the following standards for the product’s variable input. Standard costs per unit RM Direct materials 18kg at RM5.25 Direct labour 2hours at RM7.50 Variable overhead 2hours at RM3.00 Total unit cost 94.50 15.00 6.00 115.50 The production During the month, Apex had the following actual results: Units produced 9,000 Actual labour hours 16200 hours Actual labour costs RM129,600 Materials purchased and used 161,000 at RM5.50 Variable overhead costs RM55,500 1 ANSWER SCHEME BMAC5203/JAN2012/F Required: a. b. c. Compute and explain the material price and usage variances. [7 marks] Compute and explain the labour rate and efficiency variances [7 marks] Compute and explain the variable overhead expenditure and efficiency variances. [6 marks] [TOTAL: 20 MARKS] SOLUTION 1 a. Direct material price variance =(SP-AP) AQ = (RM5.25-RM5.5) 161,000 = RM40,250 (U) // Direct material usage variance =(SQ of Actual output- AQ used)SP = (18x9000 – 161,000) RM5.25 = RM5,250 (F) /// b. Direct labour rate variance =(SR-AR) AH = (RM7.5x16,200- RM129,600) = RM8,100 (U) // Direct labour efficiency variance =(SH of AO-AH) AR = (2x9,000x16,200) RM7.5 = RM13,500 (F) /// c. Variable overhead expenditure =RM3x16,200-RM55,500 = RM6,900(U) // Variable overhead efficiency =(2x9,000 – 16,200)RM3 =RM5,400 (F) // Direct material variances An unfavorable direct-material price variance means that a higher price was paid for the material than was expected when the standard

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