. Advanced: Sales mix and quantity variances. BRK Co operates an absorption costing system and sells three products, B, R, and K which are substitutes for each other. The following standard selling price and cost data relating to these three products:

 The budgeted fixed production overhead for the last period was £81 000. This was absorbed on a machine-hour basis. The standard machine hours for each product and the budgeted levels of production and sales for each product for the last period are as follows:

 Actual volumes and selling prices for the three products in the last period were as follows:

 

Required:

a Calculate the following variances for overall sales for the last period:

(i) sales price variance;

(ii) sales volume profit variance;

(iii) sales mix profit variance;

(iv) sales quantity profit variance and reconcile budgeted profit for the period to actual sales Jess standard cost.

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b Discuss the significance of the sales mix profit variance and comment on whether useful information would be obtained by calculating mix variances for each of these three products.

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c Describe the essential elements of a standard costing system and explain how quantitative analysis can assist in the preparation of standard costs.

Transcribed Image Text:

Product Selling price por unit £14.00 £15.00 £18.00 BRY Direct material per unit 300 kg at £1,80 per kg 1.25 kg at £3 28 perg 1.04 kg at £2.50 per kg Direct labour per unt 0.5 hrs at 10.50 pe 0.8 hrs at 8.50 per hou 0.7 hrs at 08.50 per o Product Selling price por unit £14.00 £15.00 £18.00 BRY Direct material per unit 300 kg at £1,80 per kg 1.25 kg at £3 28 perg 1.04 kg at £2.50 per kg Direct labour per unt 0.5 hrs at 10.50 pe 0.8 hrs at 8.50 per hou 0.7 hrs at 08.50 per o

Answer rating: 100% (QA)

Answer 1816 a Calculation of standard profit Budgeted machine hours Overhead absorption rate Standar... View the full answer