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Question 2 Candy Chemical Berhad is a manufacturer of a chemical solution for industrial purposes. The product is called Oxychemical. The following information relates to the operation of Candy Chemical Berhad 0 Budgeted production and sales units are 120,000 can of Oxychemical per annum () A standard can of an Oxychemical consists of the following costs Direct material Direct labour Variable overhead Fixed overhead 12 litres at RM15 per tre 4 hours at RM12 per hour 4 hours at RM16 per hour RM10 per hour () All overheads are absorbed based on direct labour hours. (iv) The standard selling price per can for Oxychemical is RM450. (v) Actual results for the manufacture and sales of Oxychemical for the month of December 2021 were as follows: Sales 12,000 cans at RM430 per can 13,000 cans Production Direct material 160,000 litres at RM14 per litre Direct labour worked and 55,000 hours at RM12.50 per hour paid Variable overhead RM828,000 Fixed overhead RM440,000 (vi) There were no opening inventories of finished goods Required to calculate the following variances, indicating whether each is favourable (F) or unfavourable (UF) (a) Direct material price. (3 marks) (b) Direct material usage. (3 marks) (c) Direct labour rate. (3 marks) (d) Direct labour efficiency (3 marks) (0) (3 marks) (1) Fixed overhead efficiency (3 marks) (9) Fixed overhead expenditure. (3 marks) (h) Briefly explain ONE (1) possible cause for favourable in direct labour rate and efficiency variances (4 marks) [25 Mark] Variable overhead expenditure

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