The document discusses material variances and provides examples of calculating material variances. It defines three types of material variances - yield, mix, and price variances. It then provides examples with standard costs and actual results for different companies - ABC Limited, Bingo LTD, and Funnytrees LTD - and asks to calculate the material variances for products/ornaments made by those companies based on the information provided such as standard costs, actual quantities used and prices paid, production and sales volumes.
The document discusses material variances and provides examples of calculating material variances. It defines three types of material variances - yield, mix, and price variances. It then provides examples with standard costs and actual results for different companies - ABC Limited, Bingo LTD, and Funnytrees LTD - and asks to calculate the material variances for products/ornaments made by those companies based on the information provided such as standard costs, actual quantities used and prices paid, production and sales volumes.
The document discusses material variances and provides examples of calculating material variances. It defines three types of material variances - yield, mix, and price variances. It then provides examples with standard costs and actual results for different companies - ABC Limited, Bingo LTD, and Funnytrees LTD - and asks to calculate the material variances for products/ornaments made by those companies based on the information provided such as standard costs, actual quantities used and prices paid, production and sales volumes.
The document discusses material variances and provides examples of calculating material variances. It defines three types of material variances - yield, mix, and price variances. It then provides examples with standard costs and actual results for different companies - ABC Limited, Bingo LTD, and Funnytrees LTD - and asks to calculate the material variances for products/ornaments made by those companies based on the information provided such as standard costs, actual quantities used and prices paid, production and sales volumes.
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NESCOL
MATERIAL VARIANCES Material Variances
Yield The material yield variance is the difference between the actual amount of material used and the standard amount expected to be used.
Mix The material mix variance is the measure of difference between the cost of standard proportion of materials and the actual proportion of materials consumed in the production process.
Price The material price variance is the difference between the standard price and the actual price for the actual quantity of materials used for production.
Possible reasons for variances
Variance Favourable Adverse Using less material than Using more material than Yield budgeted budgeted
Using a higher proportion Using a higher proportion
Mix of the less expensive of the more expensive material in the product mix material in the product mix Paying less for materials Paying more for materials Price than was originally than was originally budgeted budgeted
Material variances Formula
A Standard Quantity x Standard Mix x Standard Price
B Actual Quantity x Standard Mix x Standard Price C Actual Quantity x Actual Mix x Standard Price D Actual Quantity x Actual Mix x Actual Price
Price per Per Unit Unit £ £ £ Material 1 2.00 0.40 5 Material 2 1.00 0.25 4 Material 3 3.50 0.50 7 Material 4 1.50 0.75 2 Labour 8.00 12.00 Fixed Overheads 2.00 3.00
Selling Price 26.00 30.00
Monthly Budget Data
Production and Sales 5,000 6,000 Labour Rate per Hour 8 8
Actual results Production and Sales 4,500 6,200 Selling Price 28.00 29.00
Materials Used Material 1 22,000 Grams @ £0.45 Material 2 17,000 Grams @ £0.35 Material 3 45,000 Grams @ £0.48 Material 4 14,000 Grams @ £0.65
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Bingo LTD Material Variances Exercise 1
Bingo plc manufactures two Games for which the following are the standard costs and selling price per unit:
Kg Std Price Game 1 Game 2 Per Per KG unit £ £ Material A 1.50 £3.00 0.50 Material B 0.75 £2.50 0.30 Material C 3.20 £1.60 2.00 Material D 3.60 £3.60 1.00 Material cost 2.25 6.80 Labour cost 2.50 5.00 Fixed overhead 1.50 3.00 Total Cost 6.25 14.80
Selling Price 15.00 20.00
Monthly budget data
Production and sales 12,000 15,000 Labour rate per hour £10.00 £10.00
Materials Used Material A 6,200 kg £3.10 per Kg Material B 3,150 kg £3.20 per Kg Material C 35,000 kg £1.40 per Kg Material D 23,000 kg £2.50 per Kg
Calculate the Material Variances for Game 1 and Game 2.
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Funnytrees LTD Material Variances exercise 2
Funnytrees LTD make 2 ornaments for which the following are the standard costs and selling price per unit:
Std Price HappyTre Ounces Sad Tree Per e Per unit Ounce £ £ Plastic 0.25 £0.05 5.00 Paint 0.30 £0.15 2.00 Steel 0.15 £0.15 1.00 Aliminum 0.20 £0.10 2.00 Material cost 0.55 0.35 Labour cost 1.35 1.80 Fixed overhead 0.75 1.00 Total Cost 2.65 3.15
Selling Price 9.99 14.99
Monthly budget data
Production and sales 160,000 190,000 Labour rate per hour £9.00 £9.00
