Oriental Ceramics Sdn Bhd manufactures ceramic teapots. It allocates overhead based on the number of direct labor hours. The company uses standard cost systems and has developed the following standards ( one 'unit' is a batch of 100 teapots ). Standards: Direct materials 60 pounds per batch at Rm 5 per pound. Direct labor 2.0 hours per batch at Rm 13 per hour. Variable manufacturing overhead rate is Rm 7 per direct labor hour. Predetermined fixed manufacturing overhead standard rate Rm 5 per direct labor Actual cost & operating data for the most recent month: Purchased 4260 pounds at a cost of Rm 4.90 per pound. Used 4200 pounds in producing 60 batches. Actual direct labor cost of Rm 2070 at an average direct labor cost per hour of Rm 13.80. Actual variable manufacturing overhead costs Rm 1125 Actual fixed manufacturing overhead costs Rm 1550. ***all manufacturing overhead cost is allocated on the basis of direct labor hours. Required: i) Calculate the standard cost of one batch ii) Calculate the following variances a) Material price variance b) Material quantity variance c) Labor price variance d) Labor quantity variance e) Total overhead variance
Oriental Ceramics Sdn Bhd manufactures ceramic teapots. It allocates
Standards:
Direct materials 60 pounds per batch at Rm 5 per pound.
Direct labor 2.0 hours per batch at Rm 13 per hour.
Variable manufacturing overhead rate is Rm 7 per direct labor hour.
Predetermined fixed manufacturing overhead standard rate Rm 5 per direct labor
Actual cost & operating data for the most recent month:
Purchased 4260 pounds at a cost of Rm 4.90 per pound.
Used 4200 pounds in producing 60 batches.
Actual direct labor cost of Rm 2070 at an average direct labor cost per hour of Rm 13.80.
Actual variable manufacturing overhead costs Rm 1125
Actual fixed manufacturing overhead costs Rm 1550.
***all
Required:
i) Calculate the standard cost of one batch
ii) Calculate the following variances
a) Material price variance
b) Material quantity variance
c) Labor price variance
d) Labor quantity variance
e) Total overhead variance
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