Advanced: Material mix and yield variances and ABC variance analysis. Choc Co is a company which manufactures and sells three types of biscuit in packets. One of them is called

‘Ooze’ and contains three types of sweetener: honey, sugar and syrup. The standard materials usage and cost for one unit of

‘Ooze’ (one packet) is as follows:

In the three months ended 30 November, Choc Co. produced 101000 units of ‘Ooze’ using 2200kg of honey, 1400kg of sugar and 1050kg of syrup. Note: there are 1000 grams ina kilogram (kg).
Choc Co. has used activity-based costing to allocate its overheads for a number of years. One of its main overheads is machine set-up costs. In the three months ended 30 November, the following information was available in relation to set-up costs:

Required:

(a) Calculate the following variances for materials in Ooze:
(i) Total materials usage variance; (4 marks)
(ii) Total materials mix variance; (4 marks)
(iii) Total materials quantity (yield) variance. (4 marks)

(b) Calculate the following activity-based variances in relation to the set-up cost of the machines:
(i) The expenditure variance;
(ii) The efficiency variance.
(3 marks)
(3 marks)

(c) Briefly outline the steps involved in allocating overheads using activity-based costing. (2 marks)
ACCA F5 Performance Management

Transcribed Image Text:

69 Honey Sugar Syrup 20 grams at $0.02 per gram 15 grams at $0.03 per gram 10 grams at $0.025 per gram 0.40 0.45 0.25 1.10