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SMA Variance Aanalysis

The document presents a series of management accounting questions focused on calculating various variances related to material and labor costs for furniture manufacturing companies in Hanoi. It includes specific scenarios involving standard costs, actual costs, and production efficiencies, requiring calculations for material price variance, material usage variance, labor rate variance, and labor efficiency variance. Each question provides the necessary data for performing the calculations and determining whether the variances are favorable or adverse.

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3 views3 pages

SMA Variance Aanalysis

The document presents a series of management accounting questions focused on calculating various variances related to material and labor costs for furniture manufacturing companies in Hanoi. It includes specific scenarios involving standard costs, actual costs, and production efficiencies, requiring calculations for material price variance, material usage variance, labor rate variance, and labor efficiency variance. Each question provides the necessary data for performing the calculations and determining whether the variances are favorable or adverse.

Uploaded by

havytruongw
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MANAGEMENT ACCOUNTING

QUESTION 1

A company in Hanoi manufactures wooden furniture. For a specific product, the standard cost for
the wood needed is $10 per unit. In a given period, the company plans to produce 1,000 units of
this product, so they budget for $10,000 ($10/unit x 1,000 units) for wood materials.

However, due to an increase in market prices, the actual cost of the wood is $12 per unit.
Calculate material price variance.

QUESTION 2

A company in Hanoi manufactures wooden chairs. The standard material usage is set at 10 feet
of wood per chair, which costs $5 per foot. For one month, the company manufactures 100 chairs.
According to the standard, they should have used 1,000 feet of wood (10 feet/chair * 100 chairs).
However, due to inefficiencies in the production process, they actually used 1,100 feet of wood.
Calculate material usage variance.

QUESTION 3

A furniture company in Hanoi budgets for its workers to produce 100 chairs each week. According
to the standard set by the company, each chair requires 2 hours of labor to produce, and the
standard labor rate is $20 per hour.

Due to unexpected market conditions, the company had to pay an average of $22 per hour
instead of the standard $20 per hour for those 210 hours of work. In one particular week, the

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company produces the planned 100 chairs, but it takes 210 hours instead of the standard 200
hours (100 chairs x 2 hours/chair).

Calculate labour rate and efficiency variance.

QUESTION 4

H Game Company in Hanoi has established the following standards for the prime costs of one
unit its chief product, dartboards.

Standard Cost Standard Qty Std price


Direct material $14.00 8 Kgs $1.75 per kg
Direct labour $ 2.00 0.25 hours $8.00 per hr.
Total $ 16.00
=====
During September, H Game Company purchased 320,000 kgs of direct material at a total
cost of $608,000. The total wages for September were $84,000. 90 percent of which were for
direct labour. H Game Company manufactured 38,000 dartboards during September,
using 285,000 kgs of direct material and 10,000 direct –labour hours.

Required:

Compute the following variances, indicating whether each is favourable or adverse.


(i) Direct-material price variance
(ii) Direct-material quantity variance
(iii) Direct-labour rate variance
(iv) Direct-labour efficiency variance

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QUESTION 5

HAN Co uses a traditional standard costing system to control costs and has established the
following materials, labor and overhead standards to produce one box of Detergent-DX:

• Direct materials – 1.5 pounds @ $12 per pound: $18.00


• Direct labor – 0.6 hours @ $24 per hour: $14.40
• Variable manufacturing overhead – 0.6 hours @ $5.00: $3.00
•
During August 2023, company produced and sold 3,000 boxes of Detergent-DX. 8,000 pounds of
direct materials were purchased @ $11.50 per pound. Out of these 8,000 pounds, 6,000 pounds
were used during August. There was no inventory at the beginning of August. 1600 direct labor
hours were recorded during the month at a cost of $40,000.

Required:

(a). Compute materials price variance and materials quantity variance. Assume that the materials
price variance is computed at the time of purchase.
(b). Compute direct labor rate variance and direct labor efficiency variance.

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