Company ABC mixes 2 materials, Material A and Material B in its production process. The following data is provided:
Standard:
Proportion:60% Material A
40% Material B
 

Yield: 90%
[…]

The following are extracts from the records of a cost centre within your business:

Extract 1

Cost Centre A March

Budgeted variable overhead for the year

$2,400

Budgeted output for the year

24,000 units

Actual production for March

1,800 units

Actual variable overhead for March

$200

[…]

Company ABC has suffered severe losses over the years. This situation has arisen partially because of bad industrial relations and poor management control. An extract from the standard cost system report relating to the first 3-month period reveals:

Budged fixed overhead

$800,000

Budgeted ouput

800,000 units

Standard time per unit

15 minutes

Actual hours worked

192,000

Actual output

720,000 units

Actual fixed […]

The following statement was prepared for the Company ABC:

$

$

Sales

883,500

Direct materials

232,800

Direct wages

315,600

Variable overheads

155,400

Fixed overheads

95,100

798,900

84,600

Statement Of Variance

$

Sales volume(quantity)

45,000(A)

Sales Price

16,500(A)

Direct material-Price

12,600(F)

Direct material-Usage

20,400(A)

Direct labor-Rate

6,300(F)

Direct labor-Efficiency

21,900(A)

Fixed overhead-Expenditure

5,100(A)

 Note: The company produces a single product for which the standard material usage is 3 kilos @$6 per kilo. The standard wage rate is $12 per hour. There are no opening or closing stocks.
Required:
Calculate:a) […]

 
Company ABC had the following budget for Period 1:

Product Y

Product Z

Sales ( Units)

3,000

27,000

$

$

Standard selling price

30

7.50

Standard cost

18

6.00

Standard profit

12

1.50

Actual results for Period 1:

Product Y

Product Z

Sales ( Units)

9,000

24,000

$

$

Standard selling price

31.50

6.75

Standard cost

18.00

6.00

Profit

13.50

0.75

 Required:
(i) Calculate the:
(a) Sales margin (profit) price variance
(b) Sales margin (profit) mixture variance
(c) Sales margin (profit) quantity variance (15 marks)
(ii) In view of the actual results, […]