Reference no: EM132974469
Question - Wham Berhad operates a standard costing system and analysis of variances is made every month. The standard cost card is as follows for a unit of product:
RM
Direct materials 0.5kg at RM 4/kg 2.00
Direct labour 2 hours at RM 2/hour 4.00
Variable overheads 2 hours at RM 0.30/hour 0.60
Fixed overhead 2 hours at RM 3.70/hour 7.40
Standard cost 14.00
Standard profit 6.00
Standard selling price 20.00
Budgeted output for the month of January 2021 was 5,100 units. Actual results were as follows:
Production of 4,850 units were sold for RM95,600
Materials consumed in production amounted to 2,300 kgs at a total cost of RM9,800
Labour hours paid amounted to 8,500 hours at a cost of RM16,800 Actual hours worked amounted to 8,000 hours
Variable overheads amounted to RM2,600 Fixed overheads amounted to RM42,300
Required -
a. Calculate ALL variances and prepare and operating statement for the month ending 31 January 2021.
b. Critically evaluate the importance of setting standards in management accounting.
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