Monique\'s Florals produced a special Mother\'s Day arrangement that included ei

Question

Monique's Florals produced a special Mother's Day arrangement that included eight roses. The standard and actual costs of the roses used in each arrangement follow: Standard Actual 7.50 x $0.55 S0.52 $3.90 7.20 Average number of roses per arrangement Price per rose Cost of roses per arrangement $3.96 Monique's Florals planned to make 825 arrangements but actually made 940. Required a. Determine the total flexible budget materials variance and indicate whether it is favorable (F) or unfavorable (U) b. Determine the materials price variance and indicate whether it is favorable (F) or unfavorable (U) c. Determine the materials usage variance and indicate whether it is favorable (F) or unfavorable (U) d. Confirm the accuracy of Requirements a, b, and c by showing that the sum of the price and usage variances equals the total variance

Explanation / Answer

a) Actual arrangements = 940

Standard Roses for Actual arrangement = Actual arrangements*Std Avg roses per arrangement

= 940*7.20 per arrangement = 6,768 roses

Actual Roses = Actual arrangements*Actual Avg roses per arrangement

. = 940*7.50 per arrangement = 7,050 roses

Flexible Budget Variance = (Std Roses*Std Price) - (Actual Roses*Actual Price)

= (6,768 roses*$0.55) - (7,050 roses*$0.52)

= $3,722.40 - $3,666 = $56.40 Favorable

b) Material Price Variance = (Std Price - Actual Price)*Actual Qty

= ($0.55 - $0.52)*7,050 = $211.50 Favorable

c) Material Usage Variance = (Std Qty - Actual Qty)*Std Price

= (6,768 - 7,050)*$0.55 = ($155.10) Unfavorable

d) Total Variance = Price Variance+Usage Variance

= $211.50 F+($155.10) U = $56.40 F

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