Workshop-Standard Costing and Variance Analysis (Cont) Question Wiffy Co manufac

Question

Workshop-Standard Costing and Variance Analysis (Cont) Question Wiffy Co manufactures perfume. The processes require the use of a single grade of labour and inputs of two raw materials, X and Y- Itisthe company's policy to hold no inventory ofraw materials, work in progress or finished goods The budgeted and actual production data for the most recent month is as follows: Budget 10,000 Achial 12,000 Sales/ production (bottles) Variable production costs Labour 0.4 hours per bottle 0.4 hours per bottle @$5 per hour 20,000$5 per hour 24,000 Raw materials Material X 15 grams per bottle @$0.10 per gram ,000 SO.11 per gram 16 grams per bottle 21,120 Material Y 5 grams per bottle 4 grams per bottle @%20 per gram 10,000 45,000 60,000 15,000 9,600 54,720 69,600 14,880 @$.020 per gram Sales @ S6 per bottie $5.8 per bottle Required: (a) Calculate the following variances for the most recent month: Sales price; Sales velume variance; Raw materials price varianee, Raw materials mix variance; Raw materials yicld variance. (iv) (b) From the infermation available, write report tothe chairman of the company explaining the variances calculated in your answer to (a)

Explanation / Answer

(a) (i) Sales price variance =(Actual Price * Actual units sold) - (Standard Price * Actual Units sold)

  =(5.8 * 12,000) - (6 * 12,000) = (69,600 - 72,000) = 2,400 (A)

(ii) Sales Volume Variance = (Actual units sold - Budgeted Unit sales) * Standard Contribution per unit

= (12,000 - 10,000) * 15,000/10,000 = 2000/1.5 = 1,333(F)

(iii) Raw Materials Price Variance = (Actual Quantity * Actual Price) - (Actual Quantity * Standard Price)

For Material X = (12,000 * 16 * 0.11) - (12,000 * 15 * 0.10) = (21,120 - 18,000) = 3,120(A)

For Material Y = (12,000 * 4 * 0.20) - (12,000 * 5 * 0.20) = (9,600 - 12,000) = 2,400(A)

Total = 3,120(A) + 2,400(A) = 5,520(A)

(iv) Raw Materials Mix Varaince = (Actual Mix Quantity - Standard Mix Quantity) * Standard Price

  For Material X = (12,000 - 10,000) * (15 * 0.10) = 2,000 * 1.5 = 3,000(F)

  For Material Y = (12,000 - 10,000) * (5 * 0.20) = 2,000 * 1 = 2,000(F)

Total = 3,000(F) + 2,000(F) = 5,000(F)

(b) As per the above calculation, the sales price variance is 2,400(A) , sales volume Variance is 1,333(F), Raw materials price variance is 5,520(A) and material mix variance is 5,000(F).

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.