Abraham (Pty) Ltd Company has the following information:
Direct Materials: Direct Labour:
Standard Quantity 100,000 Standard Hours 1,000
Actual Quantity 99,500 Actual Hours 1,050
Standard Price R5 Standard Rate R12
Actual Price R4 Actual Rate R13
Required
5.1 Determine the materials price variance and whether it is favourable or unfavourable. (3)
5.2 Determine the materials usage variance and whether it is favourable or
unfavourable.(3)
5.3 Determine the labour rate variance and whether it is favourable or unfavourable. (3)
5.4 Determine the labour efficiency variance and whether it is favourable or
unfavourable. (3)
Question 5 (Part B) (8 marks
At the beginning of the year Mayibuye Company Ltd estimated the following:
Assembly Department Packaging Department Overhead R 840,000
R 210,000 Direct labour hours
80,000 hrs. 4,000 hrs.
Grey uses departmental overhead rates. In the assembly department, overhead is applied on direct labour hours. In the packaging department, overhead is applied on the basis of machine hours. Actual data for the month of April are as follows:
Assembly Department Packaging Department
Overhead R 42,759 R 20,400
Direct labour hours 4,000 hrs. 300 hrs.
Machine hours 1,000 hrs. 1,200 hrs.
Required:
5.5 Calculate the predetermined overhead rate for the assembly and packaging
departments. (2))
5.6 Calculate the overhead applied to production in each department for the month of
April.(3)
5.7 Calculate how much each department's overhead is overapplied/underapplied(3)
Machine hours 20,000 hrs. 12,000 hrs.