Reference no: EM132527351

Pikachu Corp produces and sells one type of metal casting. For the month ended 31 January 2020 the following information had been established:

Production and sales 1,100 castings

Revenue RM70, 950

Material used 33,600 kg at a total cost of RM20, 832

Labor hours worked 1,820 hours at a total cost of RM14, 742

The Variable production overhead incurred RM10, 500

The Fixed production overhead incurred RM15, 500

The following standard and budgeted information are also available:

Standard material cost per casting 30 kg at a standard price of RM0.60 per kg

Standard labor hour per casting 1.75 hours at a standard rate of RM8.00 per hour

Variable production overhead RM6.00 per hour

Fixed production overhead RM9.00 per hour

Budgeted fixed production overhead RM189, 000 per year

Budgeted production and sales 1,000 castings per month

Budgeted unit selling price RM64

Required:

Question 1: Calculate ALL variances and prepare a operating statement for the month ending 31 January 2020

Question 2: Critically evaluate the importance of setting standards in management accounting.