Question 1 Hardshell Ltd makes high-quality, hand-made chocolates which it sells to large retailers. The chocolates are made in batches of 40, to fit the gift boxes the company uses. Each chocolate consists of a chocolate shell and a range of fillings which are the same for each batch selection. There are two grades of production labour: mixers and chocolatiers, who receive different rates of pay. The standard inputs of materials and labour are given in the following cost card. Inputs per batch of chocolates (40 chocolates) Input Amount Standard pricel rate Standard cost per batch Chocolate 300g 5.00 per kg 1.50 Filling 500g 10.00 per kg 5.00 Mixers 15 minutes 9.00 per hour 2.25 Chocolatiers 30 minutes 15.00 per hour 7.50 Total cost 16.25 Output for the final quarter of 20X0 was budgeted to be 30,000 batches. However, due to supply problems, actual output was only 28,000 batches. Furthermore due to the supply problems, senior management decided to amend the original standards to reflect the impact of the use of substitute materials on the production process. These materials were priced the same as the original materials. The revised standards for the period are given in the following table: Inputs per batch of chocolates (40 chocolates) Standard pricel Standard cost per Input Amount rate batch Chocolate 350g 5.00 per kg 1.75 Filling 600g 10.00 per kg 6.00 Mixers 18 minutes 9.00 per hour 2.70 Chocolatiers 34 minutes 15.00 per hour 8.50 Total cost 18.95 Actual inputs and costs for the 28,000 batches actually achieved in the period are given in the following table: Actual inputs (28,000 batches) Input Total amount Actual pricel rate Total actual cost Chocolate 10,290kg 5.00 per kg 51,450 Filling 16,296kg 10.00 per kg 162.960 Mixers 8,232 hours 9.00 per hour 74,088 Chocolatiers 16,184 hours 15.00 per hour 242.760 Total cost 531.258 Page 2 Continued/... 381ACC Required: (a) Calculate all the variances that reconcile the original standard cost of 455,000 with the actual cost of 531,258 for the final quarter of 20X0 (work to the nearest kilogramme and hour). The following figures and variances should be shown for each input and in total: (i) Materials mix planning variance; (3 marks) (ii) Materials yield planning variance; (3 marks) (ii) Labour mix planning variance; (3 marks) (iv) Labour yield planning variance; (3 marks) (v) Materials mix operational variance; (1% marks) (vi) Materials yield operational variance; (1% marks) (vii) Labour mix operational variance; (1% marks) (vii) Labour yield operational variance. (1% marks) (b) Critically appraise the performance of the company production manager over the final quarter of 20X0 with particular reference to planning and operational variances and the additional performance information they provide. (8 marks) (c) Briefly discuss the major general factors that can result in variances, and how a perfect cost investigation model would treat these different factors. (4 marks) (Total 30 marks) Question 1 Hardshell Ltd makes high-quality, hand-made chocolates which it sells to large retailers. The chocolates are made in batches of 40, to fit the gift boxes the company uses. Each chocolate consists of a chocolate shell and a range of fillings which are the same for each batch selection. There are two grades of production labour: mixers and chocolatiers, who receive different rates of pay. The standard inputs of materials and labour are given in the following cost card. Inputs per batch of chocolates (40 chocolates) Input Amount Standard pricel rate Standard cost per batch Chocolate 300g 5.00 per kg 1.50 Filling 500g 10.00 per kg 5.00 Mixers 15 minutes 9.00 per hour 2.25 Chocolatiers 30 minutes 15.00 per hour 7.50 Total cost 16.25 Output for the final quarter of 20X0 was budgeted to be 30,000 batches. However, due to supply problems, actual output was only 28,000 batches. Furthermore due to the supply problems, senior management decided to amend the original standards to reflect the impact of the use of substitute materials on the production process. These materials were priced the same as the original materials. The revised standards for the period are given in the following table: Inputs per batch of chocolates (40 chocolates) Standard pricel Standard cost per Input Amount rate batch Chocolate 350g 5.00 per kg 1.75 Filling 600g 10.00 per kg 6.00 Mixers 18 minutes 9.00 per hour 2.70 Chocolatiers 34 minutes 15.00 per hour 8.50 Total cost 18.95 Actual inputs and costs for the 28,000 batches actually achieved in the period are given in the following table: Actual inputs (28,000 batches) Input Total amount Actual pricel rate Total actual cost Chocolate 10,290kg 5.00 per kg 51,450 Filling 16,296kg 10.00 per kg 162.960 Mixers 8,232 hours 9.00 per hour 74,088 Chocolatiers 16,184 hours 15.00 per hour 242.760 Total cost 531.258 Page 2 Continued/... 381ACC Required: (a) Calculate all the variances that reconcile the original standard cost of 455,000 with the actual cost of 531,258 for the final quarter of 20X0 (work to the nearest kilogramme and hour). The following figures and variances should be shown for each input and in total: (i) Materials mix planning variance; (3 marks) (ii) Materials yield planning variance; (3 marks) (ii) Labour mix planning variance; (3 marks) (iv) Labour yield planning variance; (3 marks) (v) Materials mix operational variance; (1% marks) (vi) Materials yield operational variance; (1% marks) (vii) Labour mix operational variance; (1% marks) (vii) Labour yield operational variance. (1% marks) (b) Critically appraise the performance of the company production manager over the final quarter of 20X0 with particular reference to planning and operational variances and the additional performance information they provide. (8 marks) (c) Briefly discuss the major general factors that can result in variances, and how a perfect cost investigation model would treat these different factors. (4 marks) (Total 30 marks)