Foley Ltd. manufactures and sells snack bars. Sales of its top selling ‘Double Bar’ have been steadily increasing but the company is not sure that profits have been growing at the same rate. The budgeted figures for June 2021 were as follows:

            Sales Price                                          (350,000 units)                        €1.60

Direct Material – Chocolate               20 grams @ €6 per kg             €0.12

            Direct Material – Biscuit                    30 grams @ €8 per kg             €0.24

            Direct Material – Toffee                     10 grams @ €9 per kg             €0.09

            Direct Labour                                     3 minutes @ €12 per hour      €0.60

            Variable Overhead                              3 minutes @ €3 per hour        €0.15

           

The actual results for June were:

                                                                                                           

            Sales (362,500 units)                                                              €569,125.00

            Direct Material – Chocolate               (7,975 kg)                   € 47,052.50

            Direct Material – Biscuit                    (10,150 kg)                 € 83,230.00

            Direct Material – Toffee                     (4,350 kg)                   € 36,975.00

            Direct Labour                                     (17,219 hours)            €210,072.00

            Variable Overhead                                                                  € 53,378.90   

            Contribution                                                                            €138,416.60   

Note: The mix of materials can be changed.

Required:

1. Calculate the following variances:

• Sales Price and Volume
• Material Price, Usage, Mix and Yield
• Labour Rate and Efficiency
• Variable Overhead Rate and Efficiency

28 Marks

2. According to your calculations, was the change to the material mix the correct one? Why?

Answer rating: 100% (QA)

STEP 1 Variance analysis is done to found out the reason for the difference in results between budgeted costs and actual costs Sales price Variance Actual selling price Budgeted selling price Actual o... View the full answer