Question

Question 1: Further Aspects Budgeting and Variance Analysis                                  (15 marks)

YammiJuice manufactures the product ExoticJuice by using mango, apple and banana as ingredients. The company has provided you with the following cost and sales information which relates with the period just ended:

Standard cost per litre of SuperJuice:

Materials	Kilograms	Price per kilogram $	Total $
Apple	150	40	6,000
Banana	120	30	3,600
Mango	80	60	4,800
Total	350		14,400
Less Standard loss	30
Standard yield	320

Budgeted sales for the period are 40,960 litres at $160 per litre. There were no budgeted opening or closing inventory of SuperJuice. The actual materials used and costs were:

Materials	Kilograms	Price per kilogram $	Total $
Apple	16,800	40.25	676,200
Banana	16,500	20.80	343,200
Mango	8,700	60.40	525,480
Total	42,000		1,544,880
Less actual loss	5,520
Actual yield	36,480

All of the production of ExoticJuice was sold during the period for $160.75 per kilogram.

Required 1.1 Calculate material mix variance for each material and in total for SuperJuice. Show your workings                                                                                                                                                                                  Your answer: Show your workings here (Use table if necessay. Expand the space as required): Word count=

Required 1.2 Calculate material yield variance in total for SuperJuice.                                Your answer (expand the space here): Show your workings here (Use table if necessay. Expand the space as required): Word count =

Required 1.3 Explain your findings in requirement (1.1 & 2). In your explanations include what happened to material yield variance.                                                                                                 [Word limit: 150 words. Note the word count at the end of your answer] Your answer (expand the space here): A Word count =

Answer 1

	Standard Qty	Actual Qty
Materials	Standard Qty	Price per kg	Total Price	Actual Qty	Price per kg	Total Price
Apple	150	40	6,000.00	16,800	40.25	676,200
Banana	120	30	3,600.00	16,500	20.80	343,200
Mango	80	60	4,800.00	8,700	60.40	525,480
Gross Qty	350			42,000
Less: Wastage	(30)			(5,520)
Standard Yield	320	45	14,400.00	36,480	42.35	1,544,880
Budgeted Sales	40,960	160	6,553,600	36,480	160.75	5,864,160
Less; Standard Cost	40,960	45	1,843,200	36,480	42.35	1,544,880
Profit			4,710,400			4,319,280

Actual Quantity Used = 16,800 + 16,500 + 8,700 = 42,000 kg

Standard Mix = 150 + 120 +80 = 350 kg

Standard Mix on Actual Quantity Calculation

Materials	Standard Qty	Actual Qty	Standard Mix Formula	Standard Mix Qty	Price per kg	Standard Price on Actual Qty
Apple	150	16,800	42,000 * 150/350	18,000	40	720,000
Banana	120	16,500	42,000 * 120/350	14,400	30	432,000
Mango	80	8,700	42,000 * 80/350	9,600	60	576,000
Gross Qty	350	42,000		42,000
Less: Wastage	(30)	(5,520)
Standard Yield	320	36,480	42.000*320/350	38,400

Material Mix Variance

Materials	Actual Qty	Standard Mix Qty	Price per kg	Material Mix Formula	Material Mix Variance	Favorable/ Unfavorable
Apple	16,800	18,000	40	(16,800 - 18,000) * 40	(48,000)	Favorable
Banana	16,500	14,400	30	(16,500 - 14,400) * 30	63,000	Unfavorable
Mango	8,700	9,600	60	(8,700 - 9,600) * 60	(54,000)	Favorable
Gross Qty	42,000	42,000
Less: Wastage	(5,520)
Standard Yield	36,480	38,400		(36,480 - 38,400) * 160	(307,200)	Favorable

Material Yield Variance of Superjuice = (Actual Units - Standard Units on Actual Qty) * Standard Price per unit

= (36,480 - 38,400) *160

= (307,200) Favorable

Material Yield Variance is the result of actual units over standard units multiplied by the standard cost per unit. It's favorable if the actual quantity used is lesser than the standard quantity.

Material Yield Variance reflects favorable result since the net actual produce after wastage is higher than the actual output.