Bhimani, Horngren, Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
Panel C All tickets e f g ↑
€33,000 U
↑
€22,000 F
↑
Sales-mix variance
Sales-quantity variance
↑
€11,000 U
↑
Sales-volume variance Note that F = favourable effect on operating profit U = unfavourable effect on operating profit. Actual sales mix
Budgeted sales mix a
Lower tier = 6,600
÷22,000 = 30% b
Lower tier = 8,000
÷ 20,000 = 40% c
Upper tier = 15,400
÷ 22,000 = 70% d
Upper tier = 12,000
÷ 20,000 = 60% e + €77,000 = €209,000 f + €66,000 = €242,000
g + €60,000 = €220,000
17.17 Direct materials price and efficiency variances, direct materials yield and mix variances, perfume manufacturing. (40 min)
1 The direct materials standard to produce 80 litres of perfume are
40 litres of Tartarus; 30 litres of Erebus 30 litres of Uranus. Therefore, budgeted inputs allowed for each litre of perfume are
Tartarus:
40 litres ÷ 80 litres
= 0.500 litres Erebus
30 litres ÷ 80 litres
= 0.375
litres Uranus 30 litres ÷ 80 litres
= 0.375 litres
All fluids
1.250 litres Budgeted input allowed for 75,000 litres of perfume are
Tartarus 75,000
× 0.500
=
37,500 litres
Erebus 75,000
× 0.375
=
28,125 litres
Uranus 75,000
× 0.375
=
28,125 litres
All fluids
93,750 litres Solution Exhibit A presents the total direct materials price and efficiency variances for Markku Antero for the week. The total direct materials price variance can also be calculated as Direct materials price variance for each input = Actual price – Budgeted price Actual inputs
Tartarus
=
(€5.50 – €6.00) x 45,000
=
€22,500 F Erebus
=
(€4.20 – €3.50) x 35,000
=
24,500
U Uranus =
(€2.75 – €2.50) x 20,000
=
5,000 U Total direct materials price variance
€ 7,000 U The total direct materials efficiency variance can also be calculated as Direct materials efficiency variance for each input = Actual inputs used Budgeted inputs allowed for actual output achieved × Budgeted prices
Bhimani, Horngren, Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
Tartarus
=
(45,000 – 37,500) × €6.00
=
€45,000.00 U Erebus
=
(35,000 – 28,125) × €3.50
=
24,062.50 U Uranus
=
(20,000 – 28,125) × €2.50
=
20,312.50 F Total direct
materials efficiency variance €48,750.00 U
Solution Exhibit Ab Columnar presentation of direct materials price and efficiency variances for Markku.
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