Reference no: EM132577217

Safiyyah Sdn Bhd (SSB) manufactures women maxi dress for Malaysian market. It is a single product. The standard costs of materials and labor for productions are as follows:

Items                                                  Costs

Cloth (4 meters per dress)            RM4.50 per meter

Zip and button                             RM0.50 per set

Lace                                           RM1.50 per dress

Production labor cost                   RM9.00 per dress

Standard variable overhead cost is RM4 per dress (based on direct labor hours). Fixed overhead is budgeted at RM16,000 per month. In May 2020, the following data pertain to operations are as follows:

Materials purchased:                                                                 8,000 units costing RM39,400

Materials used in production of 1,500 units of finished product:     6,200 units of materials

Direct labor used:                                                                     1,500 hours costing RM15,000

Variable overhead costs incurred:                                               RM5,960

Fixed overhead costs incurred:                                                  RM17,500

REQUIRED:

Question (a) Analyze the following variances (show all workings):

i. Materials usage variance 

ii. Labor rate variance 

iii. Variable overhead spending variance

iv. Fixed overhead budget variance 

Question (b) Propose ONE (1) reason and ONE (1) possible solution for the unfavorable variances in part (a) i and iv above if you are the Production Manager for SSB.