PLANNING AND OPERATIONAL VARIANCES Yellow Apron Ltd is a food manufacturer that specialized in packaging wholesome foods for its customers. It operates strategically in the parish of Manchester in order to have easy access to its many suppliers of fresh vegetables, starches and meats. The company operates a standard costing system and uses this to manage its manufacturing costs. The standard costs for the previous half year is as follows: Vegetables Vegetables usage Meats Meats usage Starches Starches usage Direct labour Direct labour hours Each meal feeds a family of four. The parish just recently experienced a significant amount of rainfall and this had varying impact on the input prices. There was a massive turnover of labour due a change in government policy on overseas work programs that was unexpected and the human resource division had to revise pay rates to slow down the attrition of staff. There were two new meat suppliers that started production 3 month ago. This created a glut on the market that reduced the cost of that input. Vegetables Meats Starches Direct labour rate Per unit $125 0.5 kg $460 At the end of the 6 month period the prices were as follows: 1 $275 per kg $120 per kg $45 per kg $500 per hour 2 kg $150 3 kg 0.5 hours $200 The actual results for the half year were: Vegetables Meats Starches Direct labour rate Actual quantity of meals sold during the period There were no changes in material usage nor were there any changes in the labour hours worked. 0.48 kg @ $260 per kg 2.3 kg @ $115 per kg 3.5 kg @ $52 0.46 hours @ $450 per hour 25,000 meals You are the management accountant for Green Apron Ltd and the Finance Director has asked you to conduct a variance analysis and present this at the upcoming Board Meeting. Required: (a) Compute the relevant planning and operational variance for each input. (15 marks) (b) Comment on factors that have to be considered before a budget is allowed to be revised taking into account the variances identified in part (a). (10 marks)

PLANINTE AND OPERATHONAL VARLANCES Yellow Apron Ltd is a food manufacturet that specialined in packaping ubelevome foods for its caslomen. It operates itrategically in the parish of Manchester if oeder to brve eary accest to its many suppliers of Sresh vegetables, starches and meats. costs. The standard costs for the previoes half year is as follows. Each meal foeds a family of four. The parish just rocently experienced a significant amount of rainfall and this bud vayiag impact on the input prices. These was a thassive tursever of labour dae a change in government policy on oversean wok programs thas was unexpected and the buman resource division had to revise pay rates to slow down the attrition of staff There are hes ser mez sappliers that varted production 3 moeth age. This created a ght on the market lexe sefoces the cost of that input. At the end of the 6 moth period the jrices were as follows: There were no changes it material esage noe were there any chunges in be labour bours wotked. The actual results for the half year were: You are the masagenent accoustaet for Greca Apree Lid and the Fiance Devecter bas asked you to conduct a variance analysis and present this at the upcotaing Beasd Meeting. Required: (a) Compute the relevant planning and operatiseal varance for each ingut: (15 mark) (b) Coenment on facten that have to be considered before a bodget is allowed to be fevised taking into account the variances ideatified in part (a). (10 =arks)