H&H Pty Ltd. is a newly established ice-cream subsidiary of a well-known Australian plant-based snack manufacturer...

 

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H&H Pty Ltd. is a newly established ice-cream subsidiary of a well-known Australian plant-based snack manufacturer in Victoria, named Taste of Nature (To Ltd.). H&H specializes in producing healthy ice-cream from 100% organic fruit. The company aims to produce the most healthy and tasty ice-cream for Australia. In 2020, the company has a short-term goal of winning an local business award in the customer satisfaction and sales categories. This will be the basis for the company to nominate itself to be one of the main snack suppliers to all schools in Melbourne suburbs. The first product that H&H introduced 1 the market in January 2020 was Avocado Ice-cream, which is made from 100% avocado and condensed milk. Data about standard costs and forecast opera for 2020 is presented below. Standard costs for a 1kg bucket of Avocado Ice-Cream Quantity of input per Direct labour-Processing Inputs Avocado (kg) Condensed milk (liter) Direct labour-Packing (hour) Variable overhead (based on direct labour hour) Fixed overhead (based on direct labour hour) bucket of Avocado ice- cream Price per unit of input ($/unit of Standard costs ($ per bucket of Avocado ice- input) cream) 0.6 8 4.80 0.4 3 1.20 0.1 19 1.90 0.05 19 0.95 0.15 0.3 0.05 0.15 0.1 0.02 Total standard cost 8.91 Budgeted data from 1 Jan 2020 to 31 December 2020 Production output (buckets of ice-cream) 480,000 Fixed costs ($) 9,600 Machine hour (hours) 96,000 Budgeted sale volume (buckets) 480,000 Mark-up on cost 50% Budgeted selling price per 1kg bucket of Avocado ice-cream 13.37 Actual production Actual sales Actual selling price ($/1kg bucket) Actual Avocado purchased (kg) Actual avocado used in production (kg) Actual price of avocado ($/kg) Actual condense milk purchased Actual condense milk used in production (kg) Actual price of condense milk ($/liter) Actual processing hour Actual packing hour Actual direct labour rate ($/hour) Actual variable costs ($) Actual fixed costs ($) Information Page - to be used to answer ALL questions 114,000 114,000 12 72000 66,000 9 48,000 47,400 3.50 10,500 5,250 20 6,000 3,000 You are the accountant of H&H and at the end of first quarter you are required to report on the financial performance in a brief report. Please prepare a repor explain the variance in figures by answering the 3 questions below: Requirement 1: Prepare flexible P&L budget and actual P&L, and calculate variances for the first quarter of 2020 (3 marks) Requirement 2: Apply Management by Exception principle, select two cost variances and investigate these variances in detail. Explain reason for your choice? (4 marks) Requirement 3: In light of the current soilial situation caused by Covid 19, please comment on overal performance of H&H based on the variances calculate Note: Calculation of variances must be done in Excel cells, and explaination of reason to choose variance is typed in the text box t to d above (3 marks) H&H Pty Ltd. is a newly established ice-cream subsidiary of a well-known Australian plant-based snack manufacturer in Victoria, named Taste of Nature (To Ltd.). H&H specializes in producing healthy ice-cream from 100% organic fruit. The company aims to produce the most healthy and tasty ice-cream for Australia. In 2020, the company has a short-term goal of winning an local business award in the customer satisfaction and sales categories. This will be the basis for the company to nominate itself to be one of the main snack suppliers to all schools in Melbourne suburbs. The first product that H&H introduced 1 the market in January 2020 was Avocado Ice-cream, which is made from 100% avocado and condensed milk. Data about standard costs and forecast opera for 2020 is presented below. Standard costs for a 1kg bucket of Avocado Ice-Cream Quantity of input per Direct labour-Processing Inputs Avocado (kg) Condensed milk (liter) Direct labour-Packing (hour) Variable overhead (based on direct labour hour) Fixed overhead (based on direct labour hour) bucket of Avocado ice- cream Price per unit of input ($/unit of Standard costs ($ per bucket of Avocado ice- input) cream) 0.6 8 4.80 0.4 3 1.20 0.1 19 1.90 0.05 19 0.95 0.15 0.3 0.05 0.15 0.1 0.02 Total standard cost 8.91 Budgeted data from 1 Jan 2020 to 31 December 2020 Production output (buckets of ice-cream) 480,000 Fixed costs ($) 9,600 Machine hour (hours) 96,000 Budgeted sale volume (buckets) 480,000 Mark-up on cost 50% Budgeted selling price per 1kg bucket of Avocado ice-cream 13.37 Actual production Actual sales Actual selling price ($/1kg bucket) Actual Avocado purchased (kg) Actual avocado used in production (kg) Actual price of avocado ($/kg) Actual condense milk purchased Actual condense milk used in production (kg) Actual price of condense milk ($/liter) Actual processing hour Actual packing hour Actual direct labour rate ($/hour) Actual variable costs ($) Actual fixed costs ($) Information Page - to be used to answer ALL questions 114,000 114,000 12 72000 66,000 9 48,000 47,400 3.50 10,500 5,250 20 6,000 3,000 You are the accountant of H&H and at the end of first quarter you are required to report on the financial performance in a brief report. Please prepare a repor explain the variance in figures by answering the 3 questions below: Requirement 1: Prepare flexible P&L budget and actual P&L, and calculate variances for the first quarter of 2020 (3 marks) Requirement 2: Apply Management by Exception principle, select two cost variances and investigate these variances in detail. Explain reason for your choice? (4 marks) Requirement 3: In light of the current soilial situation caused by Covid 19, please comment on overal performance of H&H based on the variances calculate Note: Calculation of variances must be done in Excel cells, and explaination of reason to choose variance is typed in the text box t to d above (3 marks)