B2090C Darwin Pte Ltd (“Darwin”) produces a high-end food processor called the Waze: Management Accounting Assignment, RP

Question 1 (11 marks)

Darwin Pte Ltd (“Darwin”) produces a high-end food processor called the Waze.
The table below shows the direct labour standard cost to produce one unit of the Waze.

Standard Cost
Description

Direct labour
1.5 hours at $8 per hour

 

During January, 2,500 units of the Waze were produced, and the actual direct labour costs were as follows:

Actual Cost
Description

Direct labour
2,000 hours at $12 per hour

 

a. Determine the values for (i) and (ii) in the template below. Show all your workings clearly where required.

Table 1: Template

Description
 Flexible Budget

Standard rate
Standard Hours

Adjusted to Actual Output

Direct labour
(i)
(ii)

b) Compute the direct labour rate and efficiency variances and indicate if each variance is “Favourable” or “Unfavourable”.

c) Identify one (1) possible cause for the direct labour efficiency variance calculated in part (b).

d) Marks will be awarded for Oral Questioning for this section. Please see marking criteria below.

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