Analyze into Overhead Controllable Variance

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Reference no: EM132784497

Question - MnM Chocolate calculates the COGS using standard cost of goods. To produce 1 bar of chocolate, the ingredients needed are:

chocolate 3gr, Rp. 150 = Rp. 450

beans 1gr, Rp. 100 = Rp. 100

sugar 1gr, Rp. 50 = Rp. 50

During March, 2.050 chocolate bars were produced with the components of

chocolate 6.100gr, Rp. 150

beans 2.000gr, Rp. 90

sugar 1.900gr, Rp. 60

Additional Info:

Material Cost Variance: Rp 21,000

Material Usage Variance: Rp 20,000

Material Yield Variance: Rp 15,000

It is assumed that to produce one chocolate bar, it takes 0.03 Direct Labor Hours at a wage rate of Rp. 5,000 / Direct Labour Hours and 0.02 Machine Hours with a Factory Overhead (FOH) rate of Rp. 12,500 (Variable Rate Rp. 7,500 and Fixed Rate Rp. 5,000). The actual working hours are 62 hours, with a real wage rate of Rp. 5,500 /Direct Labour Hours and the actual FOH is Rp. 500,000 for 42 Machine Hours.

Normal capacity is 40 Machine Hours

Required -

a. Calculate the standard cost of goods per chocolate bar.

b. Calculate the difference/Variance in Direct Labour and analyze it into Labour Rate Variance (LRV), Labour efficiency variance (LEV) and Labour Yield Variance (LYV).

c. Calculate the difference/Variance in FOH and analyze into Overhead Controllable Variance, Overhead Volume Variance and Total Variable Overhead Variance.

Reference no: EM132784497

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