Question

Jam manufactured Company calculates costs on a flexible budget basis. 6kg of banana are budgeted to result in one jar

Budget: 45,000 jars	Units	Price	Total
Banana from Cali	135,000	0.4	54,000
Banana from Flo	90,000	0.45	40,500
Banana From Mexico	45,000	0.5	22,500
			117,000
Actutal : 57,600 jars	Units	Price	Total
Banana from Cali	160,000	0.45	72,000
Banana from Flo	115,200	0.45	51,840
Banana from Mexico	57,600	0.55	31,680
	332,800		155,520

What is efficiency variances, Direct material mix and yield variance?

Answer 1

Budgeted ( for 57600 Jars)
Product	Intital Budgeted	Working	Actual Budgeted	Price	Total Budgeted
Banana from Cali	1,35,000	135000*57600/45000	1,72,800	0.40	69,120
Banana from Flo	90,000	90000*57600/45000	1,15,200	0.45	51,840
Banana from Mexico	45,000	45000*57600/45000	57,600	0.50	28,800
Total			3,45,600		1,49,760

Actual - 57600 Jars
Product	Units	Price	Total (Actual)
Banana from Cali	1,60,000	0.45	72,000
Banana from Flo	1,15,200	0.45	51,840
Banana from Mexico	57,600	0.55	31,680
Total	3,32,800		1,55,520

						Total Varaicne
Material Efficiency Variance		(SQ-AQ)* SP	Banana from Cali	(172800-160000)*0.40	5,120
Formula			Banana from Flo	(115200-115200)*0.45	-
Standard Cost of standard quantity for actual production - standard cost of actual quantity		SQ = Standard Qty                             AQ = Actual Qty                                 SP = Standard Price	Banana from Mexico	(57600-57600)*0.55	-	5,120

Calculation of RAQ
Product	Total Actual Quantity	Working	Total
Banana from Cali	332800	332800/345600*172800	1,66,400
Banana from Flo		332800/345600*115200	1,10,933
Banana from Mexico		332800/345600*57600	55,467
			3,32,800

Direct Material Mix Variance		(RAQ-AQ)* SP	Banana from Cali	(166400-160000)*0.40	2,560
Formula			Banana from Flo	(110933-115200)*0.45	-1,920
Standard Cost of Actual quantity in Standard proportion - standard cost of actual quantity		RAQ = Revised actual quantity Rewritten in standard Proportion                 AQ = Actual Qty                                   SP = Standard Price	Banana from Mexico	(55467-57600)*0.55	-1,173	-533

Direct Material Yield Variance		(SQ-RAQ)* SP	Banana from Cali	(172800-166400)*0.40	2,560
Formula			Banana from Flo	(115200-110933)*0.45	1,920
Standard Cost of Standard quantity for Actual proportion - Standard Cost of Actual quantity in Standard proportion		RAQ = Revised actual quantity Rewritten in standard Proportion                 SQ = standard Qty                                   SP = Standard Price	Banana from Mexico	(57600-55467)*0.55	1,173	5,653