Question
Since preparing the master budget for LEGO's sustainability range for FY 2022/23 (in your assignment) you have been asked to review their first month's (July)
Since preparing the master budget for LEGO's sustainability range for FY 2022/23 (in your assignment) you have been asked to review their first month's (July) performance and prepare direct materials and direct production variance calculations ready to present to the Head of Sustainability, LEGO Australia at your next meeting.
Use the following information:
Budgeted Direct Materials cost per LEGO pack
| Plant Based Bricks | Packaging | |
| LEGO PACK 1: The Monkey Kid | $ 52.75 | $ 14.25 |
| LEGO PACK 2: Minions | $ 38.50 | $ 22.50 |
| LEGO PACK 3: Classic | $ 18.20 | $ 3.75 |
Budgeted Manufacturing Time/Production Machine Hours per product:
| $ 38.50 | per hour | ||
| LEGO PACK 1: The Monkey Kid | 1 | hour | |
| LEGO PACK 2: Minions | 0.75 | hours | |
| LEGO PACK 3: Classic | 0.4 | hours | |
| Production Budget | DM Cost | July |
| LEGO PACK 1: The Monkey Kid | $ 67.00 | 80 |
| LEGO PACK 2: Minions | $ 61.00 | 1350 |
| LEGO PACK 3: Classic | $ 21.95 | 1000 |
| Direct Materials used in production | ||
| LEGO PACK 1: The Monkey Kid | $ 5,360 | |
| LEGO PACK 2: Minions | $ 82,350 | |
| LEGO PACK 3: Classic | $ 21,950 | |
| Total Direct Materials Used | $ 109,660 | |
| Target Ending Direct Materials Inventory | $ 24 609 | |
| Less Beginning Direct Materials Inventory | $ 54,275 | |
| Total Purchases of Direct Materials | $79,994 |
Budgeted Direct Production | |||
| Direct Production Cost Required: | Time | Cost | Total |
| LEGO PACK 1: The Monkey Kid | 1.00 | $ 38.50 | $ 38.50 |
| LEGO PACK 2: Minions | 0.75 | $ 38.50 | $ 28.88 |
| LEGO PACK 3: Classic | 0.40 | $ 38.50 | $ 15.40 |
| Production Budget | DP Cost | July Units | July Cost |
| LEGO PACK 1: The Monkey Kid | $38.50 | 80 | $ 3,080 |
| LEGO PACK 2: Minions | $28.88 | 1350 | $ 38,981 |
| LEGO PACK 3: Classic | $15.40 | 1000 | $ 15,400 |
| Total Direct Production Cost Used | $ 57,461 |
Required:
- If the actual production units and costs for July were as below, complete the Actual and Variance columns (highlighted in the grey section of the 3rd table below).
[10 marks]
| Actual unit costs | Plant Based Bricks | Packaging |
| LEGO PACK 1: The Monkey Kid | $ 52 | $ 14 |
| LEGO PACK 2: Minions | $ 40 | $ 22 |
| LEGO PACK 3: Classic | $ 17 | $ 5 |
| Actual Production Budget | DM Cost | July |
| LEGO PACK 1: The Monkey Kid | $ 68.00 | 90 |
| LEGO PACK 2: Minions | $ 62.00 | 1300 |
| LEGO PACK 3: Classic | $ 22.00 | 1010 |
| Direct Materials cost used in production | Budget | Actuals | Variance | F/U |
| LEGO PACK 1: The Monkey Kid | $ 5,360 | |||
| LEGO PACK 2: Minions | $ 82,350 | |||
| LEGO PACK 3: Classic | $ 21,950 | |||
| Total Direct Materials Used | $ 109,660 |
2. please Calculate the Direct Materials Price Variance and Direct Materials Efficiency Variance for Pack 1: The Monkey Kid to indicate what caused the total variance in the cost of the materials used in production. Indicate whether the resulting variance is favourable or unfavourable [5 marks]
3. Provide two (2) potential reasons why the cost of the plant based direct materials and packaging may have decreased in July. [5 marks]
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Accounting Equations & Answers
Authors: Barcharts, BarCharts Inc
1st Edition
1423218248, 9781423218241
