Popcorn Ltd uses a batch production method to produce its single product by combining two materials...

 

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Popcorn Ltd uses a batch production method to produce its single product by combining two materials Corn and Salt. The company has budgeted for a material mix ratio of 90:10 for Corn and Salk respectively. The following information relates to each batch: Direct material input 200 kg Material Corn standard price £1.50 per kg Salt standard price £3.00 per kg Actual results for month 10 were as follows: Output 1,890 kg of popcorn Corn 1,140 kg at a total price of £1,610 Salt 860 kg at a total price of £2,780 (a) Calculate, for month 10, the following variances: (i) material price for each material (ii) material usage for each material (iii) total material variance (b) Provide plausible reasons for material usage and material price variance. (c) Explain the usefulness of flexible budgeting. (12 marks) (6 marks) Popcorn Ltd uses a batch production method to produce its single product by combining two materials Corn and Salt. The company has budgeted for a material mix ratio of 90:10 for Corn and Salk respectively. The following information relates to each batch: Direct material input 200 kg Material Corn standard price £1.50 per kg Salt standard price £3.00 per kg Actual results for month 10 were as follows: Output 1,890 kg of popcorn Corn 1,140 kg at a total price of £1,610 Salt 860 kg at a total price of £2,780 (a) Calculate, for month 10, the following variances: (i) material price for each material (ii) material usage for each material (iii) total material variance (b) Provide plausible reasons for material usage and material price variance. (c) Explain the usefulness of flexible budgeting. (12 marks) (6 marks)

Answer rating: 100% (QA)

Note Direct material input is taken 2000 kgs and not 200 kgs a i Materials price variance Corn Salt ... View the full answer