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Homework answers / question archive / Padu Rancak Sdn Bhd uses variance analysis as a method of cost control
Padu Rancak Sdn Bhd uses variance analysis as a method of cost control. The following information is available for the year ended 31 July 2020: Budgeted production for the year 12,000 units Standard cost per unit: RM Direct materials (3kg at RM10/kg) 30 Direct labour (4 hours at RM6/hour) 24 Overheads (4 hours at RM2/hour) Actual production units for year 11,500 units Actual labour hours for the year 43,350 hours Actual labour cost for the year RM300,000 Actual materials used in the year 37250 kg Actual materials cost for the year RM345,000 8 62 a) Compute the following variances: i) Material price variance (ii) Material usage variance (iii) Labour rate variance (iv) Labour efficiency variance (v) Overhead efficiency variance (vi) Overhead volume variance (18 marks) (CLO2.PLO2:C3) b) Discuss TWO (2) reasons to explain why the variances occur (4 marks) (CLO2:PLO2:C4) c) Explain any possible interrelationships between some of the variances. (3 marks) (CLO2:PLO2:C4)