Name: Ridzuan bin Saharun

Student ID: 2017700141

Course: MAF 551
Group: NACAB5C

Answer Question 2 (UniQo Bhd)

a) Explain briefly any three (3) criticisms of traditionalExplain briefly any three (3) criticisms of traditional
standard costing system in relation to current economic situations.

1) Future is uncertainty and the business environment is fast changing. Hence, standards
needs frequent revision which is tedious to ensure meaningful variance reported.
2) Standards set for raw materials, labour, overhead are fixed. Hence, there is a need
for incurring extra expenses for revising the costs which requires experience and skills
employees.
3) The process of setting up standards is a difficult task as it requires technical skill. The
time and motion study are required to fix the standard. These studies require a lot of
time and money.
4) The causes for variances may be due to controllable and uncontrollable factors.
Determinations of controllability of the costs is bias

b) Calculate the following variances:

i) Material mix variance for material X

= (AM.AQ - SM.AQ) X Standard price
= (44,625 kgs - (10/15 X 44,625 kgs + 38,250 kgs) X RM 15
= (44,625 kgs - (10/15 X 82,875 kgs) X RM 15
= (44,625 kgs - 55,250 kgs) X RM 15
= 10,625 kgs X RM 15
= RM 159,375 (F)

ii) Labour yield variance

= (Actual yield - Standard Yield) X Standard Cost
= (4,550 units - 18,000 hrs / 5 hrs) X (RM 30 + RM 12)
= (4,550 units - 3,600 units) X RM 42
= 950 units X RM 42
= RM 39,900 (F)

iii) Fixed overhead expenditure variance

= Actual FOH - Budgeted FOH
= RM 93,500 - (RM 20 X 5,000 units)
= RM 93,500 - RM 100,000
= RM 6,500 (F)
iv) Labour rate operating variance for skilled labour
= (AR - RSR) X Actual Hours
= (RM 10.50 - RM 10.80) X 10,000 hrs
= RM 0.30 X 10,000 hrs
= RM 3,000 (F)

v) Labour efficiency planning variances for unskilled labour

= (SH of Actual Qty - RSH of Actual Qty) X OSR
= [(2 hrs X 4,550 units) - (2.15 hrs X 4,550 hrs)] X 6
= (9,100 - 9,782) X 6
= 682.5 X 6
= 4,095 (A)