Smooth U ltd produce ready made mixed alcohol drinks:

The standard proportions for each 1litre mixed drink are:

250ml alcohol at $ 4.0 per litre (1000 ml)

700ml of fruit juice at $ 1.0 per litre

50ml of botanicals at $ 9.0 per litre

No inventories of raw material are kept. Purchases are made as needed.

The actual raw material inputs used to produce 1000 bottles in December was:

259 litres of alcohol $ 1,061.90

710 litres of fruit juice $ 674.50

53 litres of botanicals $ 490.25

1,022 litres $ 2,226.65

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Smooth U make three different alcohol mixed drinks, most of the adjustments does not significantly affect the standard cost: Whisky Mash (WM); Gin Winder (GW); Vodka Crush (VC).

The standard production and sales schedule split between the three products is:

6 bottles WM: 1 bottle of GW: 3 bottles VC.

The following sales prices are based on per bottle values as follows:

Budget Total Budget Actual Total

WM 6,000 $ 20 (5,430 bottles) $ 105,885

GW 1,000 $ 15 (1,300 bottles) $ 20,800

VC 3,000 $ 18 (3,370 bottles) $ 59 986

Total (10,100 bottles) $ 186,671

REQUIRED:

1. Use an excel spreadsheet to calculate the variances. Show as many variance details as possible, also the cell formula details in the Excel spreadsheet

[25 marks]

2. Evaluate the findings of the variance exercise in the light of using the Excel spreadsheet and the specific variance analysis for Smooth U.

[10 marks]

TOTAL 35 MARKS