11. For the dry ingredients what are the material mix and yield variances respectively?
A. $270 favourable/$270 unfavourable
B. $360 unfavourable/$360 unfavourable
C. $360 favourable/$360 unfavourable
D. $360 favourable/$360 favourable
E. $270 unfavourable/$270 unfavourable
12. Jam Life Inc. manufactures jam products. It makes a mixed fruit and berry jam by blending strawberries, peaches, and apricots.
Budgeted costs to produce 100,000 kilograms of jam in September were:
|
Ingredient |
Kilograms |
Cost per Kg. |
Total Cost |
|
Strawberry |
80,000 kg. |
$1.25 |
$100,000 |
|
Peach |
100,000 kg. |
$1.80 |
$180,000 |
|
Apricot |
220,000 kg. |
$2.25 |
$450,000 |
Actual costs to produce 100,000 kilograms of jam in September were:
|
Ingredient |
Kilograms |
Cost per Kg. |
Total Cost |
|
Strawberry |
105,000 kg. |
$1.15 |
$120,750 |
|
Peach |
105,000 kg. |
$1.80 |
$189,000 |
|
Apricot |
210,000 kg. |
$2.10 |
$441,000 |
Required:
1. Calculate the total direct materials rate and efficiency variances.
2. Calculate the total direct materials mix and yield variances.
3. Jam Life's largest competitor sells a 500 gram jar of mixed fruit and berry jam for $4.50 . If Jam Life's management wants to meet this price and cover monthly fixed costs of $180,000 then what will be the company's margin of safety? (Assume that Jam Life will continue to use the budgeted mix of ingredients..
13. The textbook discusses five levels of variances: Level 0, Level 1, Level 2, Level 3, and Level 4. Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.
