Reference no: EM132549280

HKT Ltd manufactures different types of metal photo frames in a highly automated facility. The company has adopted a standard costing system. The standard cost per photo frame are:

Direct material: Aluminum : Copper

Direct labour Variable overhead Fixed overhead

Standard cost per unit

$ 4 sheets per unit 8 3 sheets per unit 12 7 hours per unit 56 5 machine hours per unit 15 5 machine hours per unit 10

In addition, overhead rates were based on normal monthly capacity (denominator level) of 6,000 machine hours. During 2019, 850 photo frames were produced. Actual fixed overhead was $9,300, actual variable overhead was $11,700 and actual machine hours were 4,175 hours. Other costs actually incurred in 2019 are shown below:

Direct material

Aluminum: Copper:

Direct labour

Regular time:

Required:

Actual quantities and cost of resources used 4,000 sheets purchased at $2 each; used 3,500 sheets 3,000 sheets purchased at $4.20 each; used 2,600 sheets 6,100 hours at $8.50 per hour

Question 1: Evaluate and discuss the performance of HKT Ltd for the year of 2019 by computing appropriate detailed variances for both direct and indirect cost.