MASKING is a producer of student-mask for universities and has the following information for the standard and actual costs: Estimated activity & standard cost per unit • The factory estimated that it would require 3 meters of material per unit of mask at an expected cost of RM10.00 per meter. • I t also estimated to use 5 direct labour hours per unit and estimated to pay wages at a rate of RM8.00 per hour. • The standard variable overhead rate estimated were RM6.00 per hour. Actual activity & cost • The factory manufactured 20,000 student-mask. The factory purchased and used 58,000 meters of material at total cost of 591,600. The factory used 104,000 direct labour hours and paid at a total wage of RM842, 400. • The total variable cost incurred was RM676, 000. MASKING allocates its overhead on the basis on direct labour hours.
MASKING is a producer of student-mask for universities and has the following information for the standard and actual costs: Estimated activity & standard cost per unit • The factory estimated that it would require 3 meters of material per unit of mask at an expected cost of RM10.00 per meter. • I t also estimated to use 5 direct labour hours per unit and estimated to pay wages at a rate of RM8.00 per hour. • The standard variable overhead rate estimated were RM6.00 per hour. Actual activity & cost • The factory manufactured 20,000 student-mask. The factory purchased and used 58,000 meters of material at total cost of 591,600. The factory used 104,000 direct labour hours and paid at a total wage of RM842, 400. • The total variable cost incurred was RM676, 000. MASKING allocates its overhead on the basis on direct labour hours.
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:MASKING is a producer of student-mask for universities and has the following information
for the standard and actual costs:
Estimated activity & standard cost per unit
• The factory estimated that it would require 3 meters of material per unit of mask at an
expected cost of RM10.00 per meter.
• It also estimated to use 5 direct labour hours per unit and estimated to pay wages at a rate
of RM8.00 per hour.
• The standard variable overhead rate estimated were RM6.00 per hour.
Actual activity & cost
• The factory manufactured 20,000 student-mask.
• The factory purchased and used 58,000 meters of material at total cost of 591,600.
• The factory used 104,000 direct labour hours and paid at a total wage of RM842, 400.
• The total variable cost incurred was RM676, 000.
MASKING allocates its overhead on the basis on direct labour hours.
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