Question

. Part II: Objective questions: Ol: Choc Co is a company which manufactures and sel three types of biscuit in packets. One of them is called 'Ooze and contains three types of sweetener: honey, sugar and syrup. The standard materials usage and cost for one unit of ooze, (one packet) is as follows: Sugar Syrup 20 grams at $0.02 per gram 15 grams at $0.03 per gram 10 grams at $0.025 per gram 0.40 0.45 0.25 1.10 In the three months ended 30 November, Choc Co. prodused 000 units of 'Ooze' using 2200kg of honey, 1400kg o suga and 1050kg of syrup. Note: there are 1000 grams in a kil (kg) . Required: Calculate the following variances for materials in Ooze: (a) Total materials usage variance; (b) Total materials mix variance; (c) Total materials quantity (yield) variance. .

Answer 1

Requirement (a) Total material usage variance Materials Standard usage for actual output (kgs) Actual usage(kgs) Standard cost per kg($) Variance (A) [Refer note 1] Honey Sugar Syrup 2,020 1,515 1,010 2,200 (1 gram 1000)*0.0220 1,400 (1 gram 1000)*0.0330 1,050 (1 gram 1000)*0.025- 25 -3600 3450 -1000 Note 1: Standard usage for actual output Standard quantity of material (Kg) per unit X Actual units Standard usage for actual output for Honey (20/1,000) kg X 101,000 2,020 kg Standard usage for actual output for Sugar (15/1,000) kg X 101,000 1,515 kg Standard usage for actual output for Syrup (10/1,000) kg X 101,000 1,010 kg

Requirement (b) Total material mix variance Materials Actual quantity standard mix (kgs) Actual quantity actual mix(kgs)Standard cost per kg Variance (A) [Refer note 2] Honey Sugar Syrup 2,066.67 1,550.00 1,033.33 2,200.00 1,400.00 1,050.00 20.00 30.00 25.00 (2,666.67) 4,500.00 (416.67) Note 2: Actual quantity standard mix calculation Convert gram to kg and find standard mix Honey 20/1000 0.02 kg Sugar -15/1000 = 0.015 kg Syrup 10/1000 0.01 kg Total kg of standard mix per unit 0.02 kg0.015 kg 0.01 kg 0.045 kg Total actual quantity 2,200 kg 1400 kg 1,050 kg 4,650 kg Honey (0.02kg/0.045 kg) X 4,650- Sugar(0.015kg /0.045 kg) X 4,650- Syrup (0.01kg /0.045 kg) X 4,650- 2,066.67 1,550.00 1,033.33

Requirement (c) Total material quantity (yield) variance MaterialsStandard quantity standard mix(kgs) Actual quantity standard mix(kgs)Standard cost Variance Honey Sugar Syrup 2,020 1,515 1,010 2,066.67 1,550.00 1,033.33 20.00 30.00 25.00 (933.33) (1,050.00) (583.33)