Choc Co is a company which manufactures and sells three types of biscuit in packets. One of them is called ?Ooze? and contains three types of sweetener: honey, sugar and syrup. The standard materials usage and cost for one unit of ?Ooze? (one packet) is as follows:

In the three months ended 30 November, Choc Co. produced 101 000 units of ?Ooze? using 2200kg of honey, 1400kg of sugar and 1050kg of syrup. Note: there are 1000 grams in a kilogram (kg).Choc Co. has used activity-based costing to allocate its overheads for a number of years. One of its main overheads is machine set-up costs. In the three months ended 30 November, the following information was available in relation to set-up costs:Budget

Total number of units produced ............264 000Total number of set-ups .................................330Total set-up costs .....................................$52 800ActualTotal number of unite produced ........320 000Total number of set-ups ..............................360Total set-up costs ..................................$60 000

Required:(a) Calculate the following variances for materials in Ooze:(i) Total materials usage variance;(ii) Total materials mix variance;(iii) Total materials quantity (yield) variance.(b) Calculate the following activity-based variances in relation to the set-up cost of the machines:(i) The expenditure variance;(ii) The efficiency variance.(c) Briefly outline the steps involved in allocating overheads using activity-based costing.

Transcribed Image Text:

20 grams at $0.02 per gram 15 grams at $0.03 per gram 10 grams at $0.025 per gram 0.40 0.45 Honey Sugar Syrup 0.25 1.10 %24