Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed
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| Solutions to review questions 17.1 Total direct materials-yield variance focuses on the effect of the difference between the actual total quantity of all direct materials used and the budgeted number (given that the budgeted input mix is unchanged) by calculating the difference between the two amounts (1) the budgeted cost of direct materials based on the actual total quantity of all direct materials input used and (2) the flexible-budget cost of direct materials based on the budgeted total quantity of all direct materials inputs for the actual output achieved. The total direct materials-mix variance focuses on the difference between the actual sales mix and the budgeted mix, given the actual total quantity of all direct materials inputs used are unchanged, by determining the difference between (1) the budgeted cost for the actual direct materials input mix and (2) the budgeted cost if the budgeted direct materials mix had been unchanged. In calculating both these variances, budgeted (standard) materials prices are held constant. 17.2 Yes. When inputs are substitutable, direct materials efficiency improvement relative to budgeted costs can come from two sources (1) using less input to achieve a given output and (2) using a cheaper mix to produce a given output. The direct materials yield and mix variances divide the efficiency variance into two variances the yield variance focusing on total inputs used and the mix variance focusing on how the substitutable inputs are combined. However, when direct materials inputs are not substitutable, calculating only the direct materials efficiency variance may suffice. Managers control each individual input and no discretion is permitted regarding the substitution of Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 materials inputs. All deviations from the input–output relationships are due to efficient or inefficient usage of individual direct materials. Download 1.72 Mb. Share with your friends:
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