Reference no: EM132771066
Carat plc, a premium food manufacturer, is reviewing operations for a three-month period of 20X3. 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 $12.00
Direct material A 2.5 kg at $1.70 per kg
Direct material B 1.5 kg at $1.20 per kg
Direct labour 0.45 hrs at $6.00 per hour
Fixed production overheads for the three-month period were expected to be $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 $580,800
Direct material A 21,951 kg were used at a cost of $200,000
Direct material B 67,200 kg were used at a cost of $84,000
Direct labour Employees worked for 18,900 hours, but 19,200 hours were paid at a cost of $117,120
Fixed production overheads $64,000
Budgeted sales for the three-month period were 50,000 units of Product ZP.
Requirements:
Problem a: Calculate mix and yield variances and suggest possible explanations for
1. Sales variances
II. Materials variances
III. Labor variances