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Advanced Variance 5.9

1. The document provides details of the production of product K which requires chemicals A and B in a standard 50%/50% mix. It gives the standard and actual prices and inputs for June 2008. 2. It calculates the material cost, mix, usage, and price variances based on the given information that the actual input of chemical B was 70kg, the standard normal loss is 10%, and the total material cost variance was Rs. 650 adverse. 3. The calculations show that the actual input of chemical A was 40kg, the actual price of chemical B was Rs. 20 per kg, and the actual loss was 20kg. The variances were materials mix Rs. 45 adverse, usage Rs

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George Buliki
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1K views2 pages

Advanced Variance 5.9

1. The document provides details of the production of product K which requires chemicals A and B in a standard 50%/50% mix. It gives the standard and actual prices and inputs for June 2008. 2. It calculates the material cost, mix, usage, and price variances based on the given information that the actual input of chemical B was 70kg, the standard normal loss is 10%, and the total material cost variance was Rs. 650 adverse. 3. The calculations show that the actual input of chemical A was 40kg, the actual price of chemical B was Rs. 20 per kg, and the actual loss was 20kg. The variances were materials mix Rs. 45 adverse, usage Rs

Uploaded by

George Buliki
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SOTE TWAWEZA 2012

QUESTION 5.9

One kilogram of product K requires two chemicals A and B.The following were the details of product K for the month of June, 2008:a) b) c) e) f) Standard mix Chemical A 50% and Chemical B 50% Standard price per kilogram of Chemical A Rs.12 and Chemical B Rs.15 Actual input of Chemical B 70 kilograms. Standard normal loss 10% of total input. Materials Cost variance total Rs.650 adverse.

d) Actual price per kilogram of Chemical A Rs.15

g) Materials Yield variance total Rs.135 adverse. You are required to calculate: 1. 2. 3. 4. 5. 6. Materials mix variance total Materials usage Variance total Materials price variance total Actual loss of actual input Actual input of chemical A Actual price per kilogram of Chemical B

SOLUTION
Let, actual output of chemical A be a kgs Actual price per Kg of chemical B be Rs b Standard input be 100Kgs Actual output be 90Kgs

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SOTE TWAWEZA 2012

A B (-) normal loss

Standard Q P V 50 12 600 50 15 750 100 1350 10 --90 1350

Q a 70 70 + a a 20 90

Actual P V 15 15a b 70b 15a + 70b --15a + 70b (4) AQAP

(1) SQSP A B 1350

(2) RSQSP 12 x (70+a/100) x 50 15 x (70+a/100)/50 945 + 13.5a

(3) AQSP 12 x a 15 x 70 1050 + 12a

15a + 70b

Given material cost variance = (1) (4) = -650 = 15a + 70b = 2000 Material yield variance = (1) (2) = -135 a = 40 b = 20 1) SQSP = 1350 2) RSQSP = 945 + (13.5 x 40) = 1485 3) AQSP = 1050 + (12 x 40) = 1530 4) AQAP = (15 x 40) + (70 x 20) = 2000 (a) Material mix variance = 45(A) (b) Material usage variance = 180(A) (c) Material price variance = 470(A) (d) Actual loss of actual input = 20 (e) Actual input of chemical A = 40Kgs (f) Actual price per Kgs of chemical B = 20

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