QUESTION 2

CHAPTER 2 : VARIANCE ANALYSIS

Cattie Katie Sdn Bhd has developed the following standard for one unit of “KEET KAT”.

Materials 10 kg @ RM4.50 per kg RM
Labour 4 hours @ RM6 per hour 45
Variable overheads 4 hours @ RM4.50 per hour 24
Fixed overheads 4 hours @ RM3.50 per hour 18
12
99

 Budgeted fixed overhead is RM112,500
 The actual information are as follows :

 Actual output : 8,250 units
 Actual costs :

 Material purchased : 96,500 kg costing RM438,110
 Material usage : 86,450 kg
 Labour (wages) : RM196,800 for 32,000 hours of direct labour
 Variable overheads : RM136,000
 Fixed overheads : RM111,750

You are required calculate the following variances :

(a) Material Price Variance
(b) Material Usage Variance
(c) Labour Rate Variance
(d) Labour Efficiency Variance
(e) Variable Overhead Spending Variance
(f) Variable Overhead Efficiency Variance
(g) Fixed Overhead Budget Variance
(h) Fixed Overhead Efficiency Variance