Question
Preferred Snacks produces snack mixes for the gourmet and natural foods market. Data table Its most popular product is Tempting Trail Mix, a mixture of
Preferred Snacks
produces snack mixes for the gourmet and natural foods market.
Data table
Its most popular product is
Tempting Trail Mix,
a mixture of peanuts, dried cranberries, and chocolate pieces. For each batch, the budgeted quantities and budgeted prices are as follows:
Quantity per Batch | Price per Cup | |
Peanuts | 60 cups | $2 |
Dried cranberries | 30 cups | $3 |
Chocolate pieces | 10 cups | $4 |
In the current period,
Preferred Snacks
made
170
batches of
Tempting Trail Mix
with the following actual quantity, cost, and mix of inputs:
Data table
Small changes to the standard mix of direct material quantities do not significantly affect the overall end product. In addition, not all ingredients added to production end up in the finished product, as some are rejected during inspection.
Actual Quantity | Actual Cost | Actual Mix | |
Peanuts | 11,590 cups | $21,557 | 61% |
Dried cranberries | 4,750 cups | 15,105 | 25% |
Chocolate pieces | 2,090 cups | 8,235 | 11% |
Total actual | 19,000 cups | $44,897 | 100% |
Requirements
1. | What is the budgeted cost of direct materials for the 170 batches? |
2. | Calculate the total direct materials efficiency variance. |
3. | Calculate the total direct materials mix and yield variances. |
4. | How do the variances calculated in requirement 3 relate to those calculated in requirement 2? What do the variances calculated in requirement 3 tell you about the 170 batches produced this period? Are the variances large enough to investigate? |
Requirement 1. What is the budgeted cost of direct materials for the
170
batches?
Begin by calculating the total budgeted number of cups and the budgeted cost of direct materials for one batch.
Quantity for | Total Cost for | ||||
One Batch | Price of Input | One Batch | |||
Peanuts | 60 | cups | $2 | per cup | |
Dried cranberries | 30 | cups | $3 | per cup | |
Chocolate pieces | 10 | cups | $4 | per cup | |
Total | cups |
7.3
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