Question 5 Variance Analysis

Since preparing the master budget for flyin' Fox ice blox for 2021 you have been asked to review their first quarter (Q1) performance and prepare direct materials and direct labour variance calculations ready to present to the owners at your next meeting. Use the following information: Direct Materials Budget Assumptions Budget Kilos of fruit per carton 15 Cost per Kilo of fruit $ 1.20 Percentage of purchases paid in the quarter purchased 50% Percentage of purchases paid in the quarter after purchase 50% Direct Labour Budget Assumptions Direct labour-hours required per carton 0.8 Direct labour cost her hour S 25.84 Manufacturing Overhead Budget Assumptions Variable manufacturing overhead per direct labour-hour 4.00 Fixed manufacturing overhead per quarter 60,600.00 Depreciation per quarter 15,000.00 Direct Materials Budget Schedule (in Cartons) BUDGE Required production (cartons) 9,600 Kilos of fruit needed per carton (kg) 15 Kilos of fruit needed to meet production (kg] 144,000 Add desired kg of fruit ending raw materials inventory 16,650 Total Kilos of fruit needed 160,650 Less Kilos of beginning raw materials inventory 21,000 Kilos of fruit/raw materials to be purchased 139,650 Cost of fruit/raw materials per kg $ 1.20 Cost of fruit/raw materials to be purchased $167,580Required: 1. If the actual production (in cartons) for Q1 was 8,900 and the cost per kg was $1.60, complete the Actual Direct Materials and Variances below. Assume all other budget assumptions were realised. [8 marks] Direct Materials Budget Schedule (in Cartons] BUDGET ACTUALS VARIANCE Required production (cartons) 9.600 Kilos of fruit needed per carton (kg) 15 Kilos of fruit needed to meet production (kg) 144,000 Add desired ky of fruit ending raw materials inventory 16,650 Total Kilos of fruit needed 160,650 Less Kilos of beginning raw materials inventory 21,000 Kilos of fruit/raw materials to be purchased 139,650 Cost of fruit/raw materials per kg $ 1. 20 Cost of fruit/raw materials to be purchased $167,580 2. Calculate the Direct Materials Price Variance and Direct Materials Efficiency Variance to indicate what caused the total variance in the cost of the materials purchased. [4 marks] 3. Provide one reason why the cost of the fruit/raw materials per kg increased in Q1. [2 marks]