yield variance – 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

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

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: yield variance

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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.

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.

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.

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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"

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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