Biodynamics Pty (Ltd), a sport nutrition company, manufactures a variety of scientifically tested supplements and energy...

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Biodynamics Pty (Ltd), a sport nutrition company, manufactures a variety of scientifically tested supplements and energy drinks. Bright Energy Drink is currently their top selling product and the demand for the energy drink continues to increase but this is not reflected in the company's profits. Management asked you to investigate the cost of manufacturing Bright Energy Drinks and provided you with the following information. An absorption costing system is used. The standard ingredients for ONE case (6 bottles) of Bright Energy Drink are as follow 151 of flavored water @ R8 per 1 151 of Caffeine, Taurine and Guarana mix @ R16 per 1 TOTAL Over the last month, 100 cases of Bright Energy Drinks were manufactured, using the following ingredients: 1 400 1 of Flavored water 2 100 1 of Caffeine, Taurine and Guarana mix 3 500 L Labour Fixed overhead REQUIRED 5.1 Calculate the material mix and material yield variance for the Bright Energy Drink. 5.2 Briefly discuss a possible reason for the mix variance and the yield variance. Management also provided you with the following information: Standard costs and budgeted production information: Total budgeted production Actual production information: Actual cost of labour Actual fixed cost overheads Quantity 1.5 hours 1.5 hours 1 200 units Unit price per hour R15.25 R25.75 Quantity 1716 hours R120 R240 R360 Actual production 1040 units Fixed overheads are absorbed on the basis of standard labour hours. R1 200 R5 400 R6 600 Total REQUIRED 5.3 Calculate the fixed overhead expenditure and volume and capacity variances. (the volume efficiency and capacity variances is not required) R22 88 R38.63 Total cost R26 083 R64 350 Biodynamics Pty (Ltd), a sport nutrition company, manufactures a variety of scientifically tested supplements and energy drinks. Bright Energy Drink is currently their top selling product and the demand for the energy drink continues to increase but this is not reflected in the company's profits. Management asked you to investigate the cost of manufacturing Bright Energy Drinks and provided you with the following information. An absorption costing system is used. The standard ingredients for ONE case (6 bottles) of Bright Energy Drink are as follow 151 of flavored water @ R8 per 1 151 of Caffeine, Taurine and Guarana mix @ R16 per 1 TOTAL Over the last month, 100 cases of Bright Energy Drinks were manufactured, using the following ingredients: 1 400 1 of Flavored water 2 100 1 of Caffeine, Taurine and Guarana mix 3 500 L Labour Fixed overhead REQUIRED 5.1 Calculate the material mix and material yield variance for the Bright Energy Drink. 5.2 Briefly discuss a possible reason for the mix variance and the yield variance. Management also provided you with the following information: Standard costs and budgeted production information: Total budgeted production Actual production information: Actual cost of labour Actual fixed cost overheads Quantity 1.5 hours 1.5 hours 1 200 units Unit price per hour R15.25 R25.75 Quantity 1716 hours R120 R240 R360 Actual production 1040 units Fixed overheads are absorbed on the basis of standard labour hours. R1 200 R5 400 R6 600 Total REQUIRED 5.3 Calculate the fixed overhead expenditure and volume and capacity variances. (the volume efficiency and capacity variances is not required) R22 88 R38.63 Total cost R26 083 R64 350

Answer rating: 100% (QA)

To calculate the material mix and material yield variances we need to compare the standard and actual quantities and prices of the ingredients used in ... View the full answer