Advanced: Planning and operating variances plus mix and yield variances County Preserves produce jams, marmalade and preserves. All products are produced in a similar fashion; the fruits are low temperature cooked in a vacuum process and then blended with glucose syrup with added citric acid and pectin to help setting.

Margins are tight and the firm operates a system of standard costing for each batch of jam.

The standard cost data for a batch of raspberry jam are:

Standard processing loss 3%.
The summer proved disastrous for the raspberry crop with a late frost and cool, cloudy conditions at the ripening period, resulting in a low national yield. As a consequence, normal prices in the trade were £0.19 per kg for fruit extract although good buying could achieve some savings. The impact of exchange rates on imports of sugar has caused the price of syrup to increase by 20%.
The actual results for the batch were:

Actual output was 1164 kg of raspberry jam.
You are required to

(a) calculate the ingredients planning variances that are deemed uncontrollable; (4 marks)

(b) calculate the ingredients operating variances that are deemed controllable; (4 marks)

(c) comment on the advantages and disadvan¬
tages of variance analysis using planning and operating variances; (4 marks)

(d) calculate the mixture and yield variances;
(5 marks)

(e) calculate the total variance for the batch.

Transcribed Image Text:

Fruit extract Glucose syrup Pectin Citric acid Labour 400 kg at 0.16 per kg 700 kg at 0.10 per kg 99 kg at 0.332 per kg 1 kg at 2.00 per kg 18 hrs at 3.25 per hour