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Part 1 - Actual production of Yum and Zob outputs amounted to 11,400 units. The production costs were calculated as follows:
Materials - Amak
7,500 kilograms at $2.40 per kilogram
$18,000
Materials - Brill
4,050 kilograms at $4.20 per kilogram
17,010
Materials - Comad
1,100 kilograms at $5.15 per kilogram
5,665
Total materials input
12,650 kilograms
$40,675
Labour for 12,650 kilograms processed
$70,840
Units output: Yum 7,900 units Zob 3,500 units
Required -
a) Compute the direct-material price and efficiency variances for each of the three inputs Amak, Brill, and Comad and the total price and efficiency variances.
b) Compute the direct-labour price and efficiency variances
c) Compute the direct material mix and yield variances for each of the three inputs Amak, Brill, and Comad and the total mix and yield variances.
Part 2 - Standard costing system has been widely practiced for a long time in many industries because it is a good tool to keep business operations efficient. On the other hand, there have been voices (e.g., Modern Times (1936), The Corporation (2003)) critical of standard costing system. These critical voices blame standard costing system as an impersonalizing and dehumanizing tool. Present, in no more than 400 words but at least 200 words, your opinion on the efficiency vs. ethical aspects of standard costing system.
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