Question #2 Gloria's a food manufacturer is trying to make an assessment of its operations for the past year. The entity operates a standard marginal costing system and manufactures one product, the blaster for which the following standard revenue and cost data per unit of product is available: Selling price Direct material A $24.00 2.5 kg at $3.40 per kg 1.5 kg at $2.40 per kg 0.45 hrs. at $12.00 per hour Direct material B Direct labour Actual data for the twelve-month period was as follows: Sales and production 48,000 units of the blaster were produced and sold for $1,161,600 Direct material A Direct material B 121,950 kg were used at a cost of $402,435 67,200 kg were used at a cost of $168,000 Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of $234,240 Direct labour Budgeted sales for the period were 50,000 units of Product Blaster. A recession last year meant that the market for the product declined by 5%. Required: (a) Calculate the following variances. (i) Sales volume variance. (ii) Planning and operational variances for sales volume. (iii) Price, mix and yield variances for each material. (b) Suggest two possible explanations for the material price and yield variances calculated in part (a).
Question #2 Gloria's a food manufacturer is trying to make an assessment of its operations for the past year. The entity operates a standard marginal costing system and manufactures one product, the blaster for which the following standard revenue and cost data per unit of product is available: Selling price Direct material A $24.00 2.5 kg at $3.40 per kg 1.5 kg at $2.40 per kg 0.45 hrs. at $12.00 per hour Direct material B Direct labour Actual data for the twelve-month period was as follows: Sales and production 48,000 units of the blaster were produced and sold for $1,161,600 Direct material A Direct material B 121,950 kg were used at a cost of $402,435 67,200 kg were used at a cost of $168,000 Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of $234,240 Direct labour Budgeted sales for the period were 50,000 units of Product Blaster. A recession last year meant that the market for the product declined by 5%. Required: (a) Calculate the following variances. (i) Sales volume variance. (ii) Planning and operational variances for sales volume. (iii) Price, mix and yield variances for each material. (b) Suggest two possible explanations for the material price and yield variances calculated in part (a).
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 22E: Total cost method of product pricing Based on the data presented in Exercise 17, assume that Smart...
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Gloria's a food manufacturer is trying to make an assessment of its operations for the past year.
The entity operates a standard marginal costing system and manufactures one product, the blaster
for which the following standard revenue and cost data per unit of product is available:
$24.00
Selling price
Direct material A
2.5 kg at $3.40 per kg
1.5 kg at $2.40 per kg
0.45 hrs. at $12.00 per hour
Direct material B
Direct labour
Actual data for the twelve-month period was as follows:
Sales and production 48,000 units of the blaster were produced and sold for $1,161,600
121,950 kg were used at a cost of $402,435
67,200 kg were used at a cost of $168,000
Employees worked for 18,900 hours, but 19,200 hours were paid at a cost
of $234,240
Direct material A
Direct material B
Direct labour
Budgeted sales for the period were 50,000 units of Product Blaster. A recession last year meant
that the market for the product declined by 5%.
Required:
(a) Calculate the following variances.
(i) Sales volume variance.
(ii) Planning and operational variances for sales volume.
(iii) Price, mix and yield variances for each material.
(b) Suggest two possible explanations for the material price and yield variances calculated in
part (a).
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