Reference no: EM132855603

Question - Chun Li Enterprise purchased 58,000 kg of direct material at a cost of RM591,600 which to be used in the manufacture of product. According to the production specifications, each completed unit requires 4 kg of direct material at a standard cost of RM10 per kg. Direct materials consumed by the end of the period totaled 66,500 kg in the manufacture of 16,050 finished units.

An examination of Chun Li's payroll records revealed that the company worked 43,000 labour hours with the cost of RM632,100 during the period and specifications called for each completed unit requiring 2.6 hours of labour at a standard cost of RM15 per hour.

Assume that the company computes variances at the earliest point in time.

Required - Calculate the following:

(a) Direct material price variance.

(b) Direct material quantity variance.

(c) Direct labour rate variance.

(d) Direct labour efficiency variance.

(e) On the basis of your answers 2(a) - 2(d) above, should Ronald Enterprise's management be concerned about its variances? Explain.