Management Accounting Information Analysis - University Assignment

This assignment solution focuses on management accounting information, specifically addressing standard costing and variance analysis. It includes calculations for direct material and direct labor variances, identifying both favorable and unfavorable variances. The solution demonstrates the impact of changes in information on the calculated variances. The document also provides a calculation of labor rate and efficiency variances, and presents a diagram for the labor rate variance. This resource is valuable for students studying management accounting, providing a clear understanding of cost analysis and variance interpretation.

Running head: MANAGEMENT ACCOUNTING INFORMATION
Management accounting information
Name of the student
Name of the university
Author note

1MANAGEMENT ACCOUNTING INFORMATION
Table of Contents
Question 1..................................................................................................................................2
1. Standard cost...................................................................................................................2
2. Variances.........................................................................................................................2
3. Changes in the solution with change in information.......................................................3
Question 2..................................................................................................................................3

2MANAGEMENT ACCOUNTING INFORMATION
Question 1
Total production (units) 1200
Standard cost per unit
Direct material $ 24.00
Direct labour $ 64.00
Total cost per unit $ 88.00
1. Standard cost
Standard material cost for January = $ 24 * 1200 units = $ 28,800
Standard labour cost for January = $ 64 * 1200 units = $ 76,800
2. Variances
a. Direct material price variance = (Actual quantity purchased * actual price) – (actual
quantity purchased * standard price)
= (19000*1.30) – (19000*1.2)
= 1900 (Unfavourable)
b. Direct material quantity variance = (standard quantity – actual quantity) * standard
price
= [(1200*20) – 19000] * $ 24
= $ 120,000 (Favourable)
c. Direct labour rate variance = (actual hours worked * actual rate) – (actual hours
worked * standard rate)
= (4200 * $ 17) – (4200 * $ 16)
= $ 4200 (Unfavourable)
d. Direct labour efficiency variance = (actual hours worked * standard rate) – (standard
hours allowed * standard rate)

3MANAGEMENT ACCOUNTING INFORMATION
= (4200 * $ 16) – (1200*4*16)
= $ 9600 (Favourable)
3. Changes in the solution with change in information
a. Direct material price variance = (Actual quantity purchased * actual price) – (actual
quantity purchased * standard price)
= (19000*1.30) – (19000*1.4)
= 1900 (Favourable)
b. Direct material quantity variance = (standard quantity – actual quantity) * standard
price
= [(1200*20) – 19000] * 20*$ 1.4
= $ 140,000 (Favourable)
c. Direct labour rate variance = (actual hours worked * actual rate) – (actual hours
worked * standard rate)
= (4200 * $ 17) – (4200 * $ 18)
= $ 4200 (Favourable)
d. Direct labour efficiency variance = (actual hours worked * standard rate) – (standard
hours allowed * standard rate)
= (4200 * $ 18) – (1200*4*18)
= $ 10,800 (Favourable)
Question 2
a. Direct labour rate variance = (actual hours worked * actual rate) – (actual hours
worked * standard rate)
= $ 120,250 – ($ 120,250/$ 18.50 * $ 18)
= $ 120,250 – $117,000 = $ 3,250 (Unfavourable)

4MANAGEMENT ACCOUNTING INFORMATION
b. Direct labour efficiency variance = (actual hours worked * standard rate) – (standard
hours allowed * standard rate)
= (120,250/18.50 * $ 18) – (2000*3*18)
= $ 117,000 - $ 108,000 = $ 9,000 (Unfavourable)
Diagram for labour rate variance
Labour rate variance
Direct labour rate variance =
(actual hours worked * actual rate) –
(actual hours worked * standard rate)
= $ 120,250 – ($ 120,250/$ 18.50 * $
18)
= $ 120,250 – $117,000 = $ 3,250
(Unfavourable)
Direct labour efficiency variance =
(actual hours worked * standard rate)
– (standard hours allowed * standard
rate)
= (120,250/18.50 * $ 18) –
(2000*3*18)
= $ 117,000 - $ 108,000 = $ 9,000
(Unfavourable)