The following standard costs were developed for one of the products of ELJAY Sdn Bhd (ESB): STANDARD COST PER UNIT Direct materials Direct labor RM 12.00 40.00 3 feet a RM4.00 per foot 5 hours @ RM8.00 per hour 5 hours @ RM4.00 per hour 5 hours @ RM6.00 per hour Variable overhead 20.00 30.00 102.00 Fixed overhead Total standard cost per unit The following information is available regarding the company's operations for the period: Units produced Materials purchased Materials used Direct labor 40,000 240,000 feet at RM4.40 per foot 150,000 feet 220,000 hours at RMS.30 per hour Overhead incurred: Variable Fixed RM770,000 RM900,000 Budgeted fixed overhead for the period is RM960,000, and the standard fixed overhead rate is based on the expected capacity of 160,000 direct labor hours. REQUIRED: (a) Compute the following variances. Indicate whether it is Favorable (F) or Unfavorable (UF) variance.

Q: Q.How do managers plan for variable overhead costs?

A: The cost which is dependent upon the level of output and changes if the level of output fluctuates…

Q: Define sales volume variance.

A: Sales volume variance (also known as sales quantity variance) occurs when the actual quantity of…

Q: what are the possible causes of favourable Wage rate variance

A: Labor or wage Rate variance: The labor rate variance measures the difference between the actual and…

Q: Which do you think is more important for controlling fixed overhead costs: the spending variance or…

A: (This is not a subjective matter of opinion but rather is based on accounting principles and theory…

Q: what are the possible causes of adverse Material usage variance

A: The variation in material consumption is determined as the difference between the quantity of actual…

Q: What is the interpretation of the direct-material price variance and the direct-material purchase…

A: Definition: Variance: Variance refers to the different levels in the actual cost incurred and…

Q: significant of variance analysis in cost management.

A: Variance analysis is a tool in cost management to compare and analyze variations in budgeted costs…

Q: What is the overall variance in overhead?

A: Overhead refers to secondary expenditures spent during the manufacturing and distribution of…

Q: Explain the term flexible budget variance.

A: Flexible Budget: It is a type of budget that changes based on the volume of business activity.…

Q: how to compute quantity/efficiency variance

A: Cost accounting is beneficial since it can demonstrate where a corporation spends money, earns…

Q: What is a spending variance and what does it mean?

A: A variance means difference between actual and budgeted amounts. A spending variance is difference…

Q: Explain direct labour efficiency variance.

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…

Q: Define direct material variance.

A: Variance:   Variance refers to the difference level in the actual cost incurred and standard cost.…

Q: Which method is used to see if a relationship between the cost driver and total cost exists?…

A: Cost drivers means activity units that will cause change in total cost for example, number of…

Q: Define fixed overhead variance.

A: Fixed Overhead Variance is the difference between actual and absorbed fixed production overheads…

Q: criticly identify the possible causes of labour and material variance

A: Labour Variances: 1. Unskilled or inefficient workers. 2. Unfavourable wage rates. 3. Unexpected…

Q: How to calculate total prime cost

A: Meaning of Prime Cost: Prime costs are a firm's expenses directly related to the materials and labor…

Q: what are the possible causes of favourable Labour efficiency variance

A: The capacity to employ labor in a manner that is consistent with expectations is what the labor…

Q: Assume the variance is material, what is the adjustment of the cost of good sold

A: Solution: Adjustment cost of goods sold vary based on variance in material or immaterial.

Q: What Is load percent?

A: Load Percent: It is the percentage of load at which the system is operating. The total load is given…

Q: direct materials mix variance for this problem

A: The benchmark is established in advance, and actual performance is assessed in comparison to it.…

Q: static budget vs flexible budget

A:

Q: is direct material variance a measure of?

A: Direct material variance is the difference between standard material costs and actual material costs…

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance. 

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.