4. ABC Manufacturing has developed the following standards for one of its products: Standards Per...
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4. ABC Manufacturing has developed the following standards for one of its products: Standards Per Unit Direct materials: Allowed to use 10 meters/unit Price RM 10/meter Direct Labor: Hours allowed 4 hours/unit Labor rate RM 10/hour Below were actual activities for the month of August: Material purchased 16,000 meters @ RM 10.60 per meter Material used 12,500 meters Direct labor worked 4,600 direct labor hours @ RM 15.80 per hour Units produced 1,200 units
A. Calculate the materials price variance and indicate whether it is favorable or unfavorable.
B. Calculate the materials usage variance and indicate whether it is favorable or unfavorable.
C. Calculate the labor rate variance and indicate whether it is favorable or unfavorable.
D. Calculate the labor efficiency variance and indicate whether it is favorable or unfavorable.
E. Explain what favorable cost variance and unfavorable cost variance means. (2 marks)
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