Solution Exhibit 17.17
Columnar presentation of direct materials, efficiency, yield and mix variances for Calypso SA.
(Actual total quantity
of all inputs used
× Actual input mix)
× Budgeted prices
(1)
(Actual total quantity
of all inputs used
× Budgeted input mix)
× Budgeted prices
(2)
Flexible budget
(Budgeted total quantity of all
inputs allowed for actual
outputs
× Budgeted input mix)
× Budgeted prices
(3)
Alpha (2,500
× 0.50) × €400 = €500,000 (2,500 × 0.75) × €400 = €750,000
(2,000
× 0.90) × €400 = Gamma (2,500
× 0.50) × €200 = 250,000
(2,500
× 0.25) × €200 = 125,000
(2,000
× 0.30) × €200 = All Inputs
€750,000
€875,000
€840,000
↑ €125,000 F
↑
€35,000 U
↑
Total mix variance Total yield variance
↑
€90,000 F
↑ Total efficiency variance F = favourable effect on operating income U = unfavourable effect on operating income.
17.20 Direct service labour price, efficiency, yield and mix variances.
(40 min)
1
Solution Exhibit A presents the total service labour price and efficiency variances for five architectural jobs done by O’Connell & Associates. The total direct service labour price variance can also be calculated as Direct service labour price variance for each input = Actual prices – Budgeted prices × Actual inputs
Principal-hours =
(€108 – €105) × 295
=
€ 885 U
Senior-hours
=
(€70 – €75) × 2,360
=
11,800 F
Junior-hours
=
(€30 – €25) × 3,245
=
16,225 U Total direct service labour price variance
€ 5,300 U
The total direct service labour efficiency variance can also be calculated as Direct service labour efficiency variance for each input = Actual inputs – Budgeted inputs allowed for actual outputs achieved × Budgeted prices
Principal-hours =
(295 – 600) × €105
=
€32,025 F
Senior-hours
=
(2,360 – 1,800) × €75
=
42,000 U
Junior-hours
=
(3,245 – 3,600) × €25
=
8,875 F Total direct service labour efficiency variance
€ 1,100 U
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Solution Exhibit Ab Columnar presentation of direct service labour price and efficiency variances for O’Connell & Associates.
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