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