Material variances – NBC Institute

PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis

Question tests calculation and interpretation of material price, usage, mix and yield variances for a petroleum additive manufacturer.

Question

Okeke and Sons produces a new petroleum additive called ‘EPBC’ used in increasing petrol engine efficiency, while at the same time reducing its fuel consumption. The actual and budgeted quantities in litres of materials required to produce ‘EPBC’ and the budgeted prices of materials in October 2016 are as follows:

You are required to:

a. Calculate the individual chemical and total direct materials price and usage variances for October 2016. (4 Marks)

b. Calculate the individual chemical and total direct materials yield and mix variances for October 2016. (4 Marks)

c. What conclusions would you draw from the various variances calculated in (a) and (b) above? (4 Marks)

d. State ONE possible cause of each of the variances computed in (a) and (b) above. (3 Marks)

Answer

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Tags: Cost Variances, Material variances, mix variance, Price Variance, Usage Variance, yield variance
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: NOV 2016

MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis

Identify which option is not a typical cause of material variances in a manufacturing setup.

Question

Which of the following is NOT a typical cause of material variances?

A. Paying higher or lower prices than planned
B. Losing or gaining quantity discounts
C. Buying complementary materials due to availability of planned material
D. Buying lower or higher quality than planned
E. Greater or lower yield from materials than planned

Answer

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Tags: Basic Variance Analysis, Cost Management, Management Information, Material variances, Variances
Level: Level 1

Topic: Basic Variance Analysis
Series: MAR/JULY 2020

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

Question

b) Zip Ltd, a premium food manufacturer, is reviewing its operations for a three-month period for 2019. The company operates a standard marginal costing system and manufactures one product, ZP, for which the following standard revenue and cost data per unit of product is available:

Selling price: GH¢12.00
Direct material A: 2.5 kg at GH¢1.70 per kg
Direct material B: 1.5 kg at GH¢1.20 per kg
Direct labour: 0.45 hours at GH¢6.00 per hour
Fixed production overheads for the three-month period were expected to be GH¢62,500.

Actual data for the three-month period was as follows:

Sales and production: 48,000 units of ZP were produced and sold for GH¢580,800
Direct material A: 121,951 kg were used at a cost of GH¢200,000
Direct material B: 67,200 kg were used at a cost of GH¢84,000
Direct labour: Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of GH¢117,120
Fixed production overheads: GH¢64,000

Required: Calculate the following variances:

i) Sales volume contribution and sales price variances
ii) Price, mix, and yield variances for each material
iii) Labour rate, labour efficiency, and idle time variances

Answer

Find Related Questions by Tags, levels, etc.

Tags: Labour Variances, Material variances, Sales Variances, Standard Costing, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: NOV 2020

MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis

Calculate material variances and explain the significance of planning and operational variances.

Question

Emefa Ltd bakes cakes by mixing three ingredients, namely Flour, Sugar, and Butter, in the standard proportions of 5:3:2, respectively. However, the production process does not always mix the ingredients in these proportions, but the cake can be sold if the mixture is within certain limits.

The new production manager (a celebrity chef) has argued that the business should use only organic ingredients in its cake production. Organic ingredients are more expensive but should produce a product with an improved flavor and give health benefits for the customers. It was hoped that this would stimulate demand and enable an immediate price increase for the cakes.

The standard prices for the ingredients are:

Flour: GH¢ 2.50 per kilo
Sugar: GH¢ 3.00 per kilo
Butter: GH¢ 2.00 per kilo

There is a 5% normal loss in the production process.

The budget for production and sales in the period was 50,000 cakes. Actual production and sale of cake mixture was 228,000 kg. During the period, the inputs were as follows:

Ingredient	Kg	GH¢
Flour	96,000	249,600
Sugar	72,000	216,000
Butter	50,000	105,000

Required:
a) Calculate the following variances:
i) Material Mix Variance (3 marks)
ii) Material Yield Variance (3 marks)
iii) Material Usage Variance (3 marks)
b) Differentiate between planning variances and operational variances. (2 marks)
c) Explain why separating variances into their planning and operational components provides better information for planning and control purposes. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Material variances, mix variance, Usage Variance, Variance Analysis, yield variance
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2019

PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis

Question tests calculation and interpretation of material price, usage, mix and yield variances for a petroleum additive manufacturer.

Question

You are required to:

a. Calculate the individual chemical and total direct materials price and usage variances for October 2016. (4 Marks)

b. Calculate the individual chemical and total direct materials yield and mix variances for October 2016. (4 Marks)

c. What conclusions would you draw from the various variances calculated in (a) and (b) above? (4 Marks)

d. State ONE possible cause of each of the variances computed in (a) and (b) above. (3 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Variances, Material variances, mix variance, Price Variance, Usage Variance, yield variance
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: NOV 2016

MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis

Identify which option is not a typical cause of material variances in a manufacturing setup.

Question

Which of the following is NOT a typical cause of material variances?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Basic Variance Analysis, Cost Management, Management Information, Material variances, Variances
Level: Level 1

Topic: Basic Variance Analysis
Series: MAR/JULY 2020

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

Question

Selling price: GH¢12.00
Direct material A: 2.5 kg at GH¢1.70 per kg
Direct material B: 1.5 kg at GH¢1.20 per kg
Direct labour: 0.45 hours at GH¢6.00 per hour
Fixed production overheads for the three-month period were expected to be GH¢62,500.

Actual data for the three-month period was as follows:

Sales and production: 48,000 units of ZP were produced and sold for GH¢580,800
Direct material A: 121,951 kg were used at a cost of GH¢200,000
Direct material B: 67,200 kg were used at a cost of GH¢84,000
Direct labour: Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of GH¢117,120
Fixed production overheads: GH¢64,000

Required: Calculate the following variances:

i) Sales volume contribution and sales price variances
ii) Price, mix, and yield variances for each material
iii) Labour rate, labour efficiency, and idle time variances

Answer

Find Related Questions by Tags, levels, etc.

Tags: Labour Variances, Material variances, Sales Variances, Standard Costing, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: NOV 2020

MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis

Calculate material variances and explain the significance of planning and operational variances.

Question

The standard prices for the ingredients are:

Flour: GH¢ 2.50 per kilo
Sugar: GH¢ 3.00 per kilo
Butter: GH¢ 2.00 per kilo

There is a 5% normal loss in the production process.

The budget for production and sales in the period was 50,000 cakes. Actual production and sale of cake mixture was 228,000 kg. During the period, the inputs were as follows:

Ingredient	Kg	GH¢
Flour	96,000	249,600
Sugar	72,000	216,000
Butter	50,000	105,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Material variances, mix variance, Usage Variance, Variance Analysis, yield variance
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2019

Question Tag: Material variances

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PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis

Question tests calculation and interpretation of material price, usage, mix and yield variances for a petroleum additive manufacturer.

MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis

Identify which option is not a typical cause of material variances in a manufacturing setup.

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis

Calculate material variances and explain the significance of planning and operational variances.

PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis

Question tests calculation and interpretation of material price, usage, mix and yield variances for a petroleum additive manufacturer.

MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis

Identify which option is not a typical cause of material variances in a manufacturing setup.

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis

Calculate material variances and explain the significance of planning and operational variances.

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PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis

Question tests calculation and interpretation of material price, usage, mix and yield variances for a petroleum additive manufacturer.

You're reporting an error for "PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis"

MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis

Identify which option is not a typical cause of material variances in a manufacturing setup.

You're reporting an error for "MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis"

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

You're reporting an error for "MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis"

MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis

Calculate material variances and explain the significance of planning and operational variances.

You're reporting an error for "MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis"

PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis

Question tests calculation and interpretation of material price, usage, mix and yield variances for a petroleum additive manufacturer.

You're reporting an error for "PM – NOV 2016 – L2 – Q5 – Standard Costing and Variance Analysis"

MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis

Identify which option is not a typical cause of material variances in a manufacturing setup.

You're reporting an error for "MI – Mar-Jul 2020 – L1 – SA – Q1 – Basic Variance Analysis"

MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis

Calculate various variances including sales volume contribution, price, mix, yield, labour rate, labour efficiency, and idle time variances for Zip Ltd.

You're reporting an error for "MA – Nov 2020 – L2 – Q3b – Standard Costing and Variance Analysis"

MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis

Calculate material variances and explain the significance of planning and operational variances.

You're reporting an error for "MA – May 2019 – L2 – Q5 – Standard Costing and Variance Analysis"

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