ANSWER 2

CHAPTER 2 : VARIANCE ANALYSIS_ANSWER

(a) Materials Price Variance (MPV)
MPV = [AP – SP] x AQP
= RM438,110 – [RM4.50 x 96,500 kg]
= RM438,110 – RM434,250
= RM3,860 [UF]

(b) Materials Usage Variance (MUV)
MUV = [AQU – SQ] x SP
= [86,450 kg – (10 kg x 8,250 u)] x RM4.50
= [86,450 kg – 82,500 kg] x RM4.50
= RM17,775 [UF]

(c) Labor Rate Variance (LRV)
LRV = [AR – SR] x AH
= RM196,800 – [RM6 × 32,000 h]
= RM196,800 – RM192,000
= RM4,800 [UF]

(d) Labor Efficiency Variance (LEV)
LEV = [AH – SH] x SR
= [32,000 h – (4 h x 8,250 u)] × RM6
= [32,000 h – 33,000 h] x RM6
= -RM6,000 [F]

(e) Variable Overhead Spending Variance (VOSV)
VOSV = Actual Variable OH – [VOAR x AH]
= RM136,000 – [RM4.50 x 32,000 h]
= RM136,000 – RM144,000
= -RM8,000 [F]

(f) Variable Overhead Efficiency Variance (VOEV)
VOEV = [AH – SH] x VOAR
= [32,000 h – (4 h x 8,250 u)] × RM4.50
= [32,000 h – 33,000 h] x RM4.50
= -RM4,500 [F]

(g) Fixed Overhead Expenditure Variance (FOEV)
FOEV = Actual Expenditure – Budgeted Expenditure
= RM111,750 – RM112,500
= -RM750 [F]

(h) Fixed Overhead Volume Variance (FOVV)
FOVV = Budgeted Expenditure – [SH x FOAR]
= RM112,500 – [33,000 h x RM3.50]
= RM112,500 – RM115,500
= -RM3,000 [F]