Chem Co manufacture a single product, product W, and have provided you with the following information which relates to the period which has just ended. Standard cost per unit of product W Materials: Material F: 15kgx$4/kg= $60 Material G: 12kgx$3/kg=$ 36 Material H: 8kgx $6/kg=$ 48 Labour: Department P: 4 hours x $10 per hour = $40 Department Q: 2 hours x $6 per hour = $12 Budgeted sales for the period are 4,500 units at $260 per unit. There were no budgeted opening or closing inventories of product W. The actual materials used were as follows. Materials: Material Price per kilo Total Kilos Material F: 59,800kg x $4.25/kg=$254,150 Material G: 53,500kg x $2.80/kg= $149,800 Material H: 33,300kg x $6.40/kg= $213,120 4,100 units of product W were produced and sold for $1,115,800. Required (a) calculate the sales variance (b) comment on your findings to help explain what has happened to the yield variance.
Chem Co manufacture a single product, product W, and have provided you with the following information which relates to the period which has just ended.
Standard cost per unit of product W
Materials:
Material F: 15kgx$4/kg= $60
Material G: 12kgx$3/kg=$ 36
Material H: 8kgx $6/kg=$ 48
Labour:
Department P: 4 hours x $10 per hour = $40
Department Q: 2 hours x $6 per hour = $12
Budgeted sales for the period are 4,500 units at $260 per unit. There were no budgeted opening or closing inventories of product W.
The actual materials used were as follows.
Materials: Material Price per kilo
Total Kilos
Material F: 59,800kg x $4.25/kg=$254,150
Material G: 53,500kg x $2.80/kg= $149,800
Material H: 33,300kg x $6.40/kg= $213,120
4,100 units of product W were produced and sold for $1,115,800.
Required
(a) calculate the sales variance
(b) comment on your findings to help explain what has happened to the yield variance.
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