Popcorn Ltd uses a batch production method to produce its single product by combining two materials Corn and Salt. The company has budgeted for a material mix ratio of 90:10 for Corn and Salk respectively. The following information relates to each batch: Direct material input 200 kg Material Corn standard price £1.50 per kg Salt standard price £3.00 per kg Actual results for month 10 were as follows: Output 1,890 kg of popcorn Corn 1,140 kg at a total price of £1,610 Salt 860 kg at a total price of £2,780 (a) Calculate, for month 10, the following variances: (i) material price for each material (ii) material usage for each material (iii) total material variance (b) Provide plausible reasons for material usage and material price variance. (c) Explain the usefulness of flexible budgeting.

Popcorn Ltd uses a batch production method to produce its single product by combining two materials Corn and Salt. The company has budgeted for a material mix ratio of 90:10 for Corn and Salk respectively. The following information relates to each batch: Direct material input 200 kg Material Corn standard price £1.50 per kg Salt standard price £3.00 per kg Actual results for month 10 were as follows: Output 1,890 kg of popcorn Corn 1,140 kg at a total price of £1,610 Salt 860 kg at a total price of £2,780 (a) Calculate, for month 10, the following variances: (i) material price for each material (ii) material usage for each material (iii) total material variance (b) Provide plausible reasons for material usage and material price variance. (c) Explain the usefulness of flexible budgeting.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 17E: Chypre, Inc., produces a cologne mist using a solvent mix (water and pure alcohol) and aromatic...

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A Company combines three types of materials to produce its product. For a 100-kilo batch, the standard cost for materials are as follows: Standard Quantity 60 kilos 36 kilos Standard Price Total Materials A Materials B P5.00 4.00 P300 144 24 kilos 120 kilos Materials C 3.00 72 P516 During August, the company produced 200 batches or 20,000 kilos of its product. Materials used for this production were: Quantity 12,600 kls 7,300 kls 4.700 kls 24,600 kilos Price Total Materials A Materials B P4.80 4.10 3.40 P60,480 P29,930 15.980 P106,390 Materials C Compute for the Materials Variance involving several materials combined in the production process.
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labour standards for one unit of Zoom are given below: Standard quantity or hours Standard price or rate Standard cost Direct materials 3.0 kilos £ 3.00 per kilo £ 9.00 Direct labour 0.3 hours £ 7.00 per hour £ 2.10 During the most recent month, the following activity was recorded: 1. 8,800 kilos of material were purchased at a cost of £2.92 per kilo. 2. Huron Company produced 2,000 units of Zoom, using 6,800 kilos of material in the production process. (The rest of the material purchased remained in inventories.) 3. A total of 4,200 hours of direct labour time was recorded at a total labour cost of £34,440. Requirement 1: Compute the direct materials price variance for the month. (Do not round intermediate calculations.) Requirement 2: Compute the direct materials quantity variance for the month.
Popcorn Ltd uses a batch production method to produce its single product by combining two materials Corn and Salt. The company has budgeted for a material mix ratio of 90:10 for Corn and Salk respectively. The following information relates to each batch: Direct material input 200 kg Material Corn standard price £1.50 per kg Salt standard price £3.00 per kg Actual results for month 10 were as follows: Output 1,890 kg of popcorn Corn 1,140 kg at a total price of £1,610 Salt 860 kg at a total price of £2,780 (a) Calculate, for month 10, the following variances: (i) material price for each material (ii) material usage for each material (iii) total material variance (b) Provide plausible reasons for material usage and material price variance. (c) Explain the usefulness of flexible budgeting.
Turrubiates Corporation makes a product that uses a material with the following standards: Standard quantity 7.5 liters per unit Standard price $ 1.20 per liter The company budgeted for production of 2,400 units in April, and the actual production was 2,400 units. The company used 16,410 liters of direct material to produce this output. The company purchased 16,410 liters of the direct material at $1.10 per liter. The direct materials quantity variance is computed based on materials used in production The materials quantity variance for April is: A. $1,908 U B. $810 U C. $1,908 F D. $810 F
Acadia Company uses standard costs to account for its production of ZIP. The standard cost of one unit is given below:Material A: 20.00 kilograms @ €1.00 = €20.00Material B: 5.00 kilograms @ 2.40 = 12.00Direct labour: 4.75 hours @ 15.00 = 71.25Each material is added at the beginning of the process. Production data for June, 20X9, are as follows:a.Beginning work in progress, 15,000 units, 20% completeb.Started during the month, 37,000c.Ending work in progress, 14,000 units, 75% completed.Material A issued to production, 750,000 kilogramse.Material B issued to production, 184,000 kilogramsf.Direct labour cost was €3,248,250 for 213,000 hoursg.Assume that materials A and B are perfect substitutes. Required: on the sheeta. What is the material mix variance for material A? For material B? b.What is the material yield variance?
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Beverage Drink Company processes direct materials up to the split - off point where two products, A and B, are obtained. The following information was collected for the month of July: Direct materials processed: 3,000 liters (with 25% shrinkage) Production: A 1,800 liters 450 liters Sales: А $15 per liter B $10 per liter The cost of purchasing 3,000 liters of direct materials and processing it up to the split- off point to yield a total of 2,250 liters of good products was $9,500. There were no inventory balances of A and B. Product A may be processed further to yield 1,700 liters of Product Z5 for an additional processing cost of $190. Product Z5 is sold for $70 per liter. There was no beginning inventory and ending inventory was 125 liters. Product B may be processed further to yield 350 liters of Product W3 for an additional processing cost of $320. Product W3 is sold for $75 per liter. There was no beginning inventory and ending inventory was 25 liters. If Product Z5 and Product W3…
Linis Company produces a commercial cleaning compound known as Zide. The direct materials and direct labor standards for one unit of Zide are as follows: Standard Qty Standard Price Standard Cost P 2.5/ Ib P 35/ hr Direct Materials 4.6 Ibs P 11.50 Direct Labor 0.2 hr 7.00 During the most recent month, the following activity was recorded: [a] Twenty thousand pounds of material were purchased at a cost of P2.35 per pound. [b] All of the materials purchased was used to produce 4,000 units of Zide. [c] 750 hours of direct labor time were recorded at a total labor cost of P30,375. Compute for the direct labor efficiency variance. Indicate whether favorable or unfavorable.
Sarsi Bottlers Inc, a leading softdrinks company is producing their bottle requirements. For each case of 24 eight-ounce bottles, the company prescribed the following standard product mix: Material A @ 2.4 lb, P50/lbs; Material B @ 6 lb, P22/lbs and Material C @ 1.6 lbs, P15/lb. During the month of August, 25,000 cases were produced from an input of: Material Pounds Cost/lb A 63,700 49 B 125,200 20.50 C 48,100 16 a. COMPUTE FOR THE MATERIALS MIX VARIANCE b. COMPUTE FOR THE MATERIALS YIELD VARIANCE
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Direct materials Direct labor Standard Quantity or Hours 5.70 pounds 0.50 hours Standard Price or Rate $2.50 per pound $7.50 per hour Materials price variance Materials quantity variance Standard Cost $14.25 $ 3.75 During the most recent month, the following activity was recorded: a. Eleven thousand pounds of material were purchased at a cost of $2.40 per pound. b. The company produced only 1,100 units, using 9,900 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. 650 hours of direct labor time were recorded at a total labor cost of $7,800. Required: Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive…
marina bottlers in, a leading softdrinks company is producing their bottle requirements. for eachcase of 24 eight-ounce bottles, the company prescribed the following standard product mix: Material A @ 2.4 lb , P50/lbs; Material B @ 6lb, P22/lbs and Material C @1.6 lbs, P15/lb. During the month of August, 25,000 cases were produced from an output of: Material Pound cost/lb A 63,700 P49.00 B 125,200 20.50 C 48,100 16.00 1. COMPUTE FOR THE MATERIALS MIX VARIANCE 2. COMPUTE FOR THE MATERIALS YIELD VARIANCE