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Background: Material Price Variance is 3.00 F Material Mix Variance is (-) 41.60 (A) Material Yield is (-) 19.20 (A) and hence material usage variance

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Material Price Variance is 3.00 F

Material Mix Variance is (-) 41.60 (A)

Material Yield is (-) 19.20 (A) and hence material usage variance is 60.80 (A)

Question:

Calculate planning and revised operational variances for the Enriched Oat and Standard price variances calculated in above. Using these variances reconcile budgeted and actual cost and comment on the performance of management.

At Bluegrass Farm, three feed products need to be mixed in the correct quantities to provide an appropriate nutritional diet for racehorses called 'Healthy Horse': Feed Product: Enriched Oat 10 kg @ Standard 6 kg @ Additive 4 kg @ 0.80 1.20 1.00 8.00 7.20 4.00 The planned input of 20kg of the feed products should produce 19.5kg of Healthy Horse'. The general price of Enriched Oat has increased during the period to 1.00 per kg. On the other hand, the price of Standard has decreased on the open market by 15%. During the last period 1287kg of 'Healthy Horse' have been produced and the following amounts of the feed products have been consumed. 610 550 180 kg of Enriched Oat kg of Standard kg of Additive 549 605 171 1,325 At Bluegrass Farm, three feed products need to be mixed in the correct quantities to provide an appropriate nutritional diet for racehorses called 'Healthy Horse': Feed Product: Enriched Oat 10 kg @ Standard 6 kg @ Additive 4 kg @ 0.80 1.20 1.00 8.00 7.20 4.00 The planned input of 20kg of the feed products should produce 19.5kg of Healthy Horse'. The general price of Enriched Oat has increased during the period to 1.00 per kg. On the other hand, the price of Standard has decreased on the open market by 15%. During the last period 1287kg of 'Healthy Horse' have been produced and the following amounts of the feed products have been consumed. 610 550 180 kg of Enriched Oat kg of Standard kg of Additive 549 605 171 1,325

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