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. Share with your friends: |