Mammoth Breweries is a local microbrewery that makes a single kind of beer. One of the main
Question:
Mammoth Breweries is a local microbrewery that makes a single kind of beer. One of the main raw materials needed in the brewing process is Hops. During the year, Mammoth changed the mix of Low quality and High quality Hops in their brewing process.
Budgeted cost for a standard barrel is as follows:
Amount (in kg) | Price per kg | |
Low Quality | 15kg | $4.00 |
High Quality | 10kg | $5.00 |
Amount Purchased | Price paid | Amount used | |
Low Quality | 240,000 kg | $3.75/kg | 221,211 kg |
High Quality | 145,000kg | $4.99/kg | 111,222 kg |
Actual production was 14,000 barrels - this was 2,000 barrels less than planned.
Required
Calculate the following:
A. Direct Material Quantity (Efficiency)Variances
B. Direct Material Mix Variances
C. Direct Material Yield Variances
D. Identify and briefly discuss at least two qualitative factors that should be considered.
E. Was it a good decision to change the mix?
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey