The Organic Foods Limited (OFL) makes a range of breads for sale direct to the public....

 

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The Organic Foods Limited (OFL) makes a range of breads for sale direct to the public. The production process begins with workers weighing out ingredients on electronic scales and then placing them in a machine for mixing. A worker then manually removes the mix from the machine and shapes it into loaves by hand, after which the bread is then placed into the oven for baking. All baked loaves are then inspected by OFL's quality inspector before they are packaged up and made ready for sale. Any loaves which fail the inspection are donated to a local food bank. The standard cost card for OFL's "Wheaty Special", one of its most popular loaves, is as follows: Processed flour Soy blend flour Yeast TOTAL 1800 grams 600 grams 40 grams White Flour Whole grain flour Yeast 2,440 Budgeted production of Wheaty Special was 1,000 units for the quarter, although actual production was only 950 units. The total actual quantities used and their actual costs were: Grams 1736 $7.20/9 $8.80/9 $20.00/g $36 608 40 2384 $Gram 7.10 8.70 24.00 39.80 Required: a) Calculate the total material mix variance and the total material yield variance for OFL for the last quarter. (b) Explain the importance of calculating material mix and yield variances The Organic Foods Limited (OFL) makes a range of breads for sale direct to the public. The production process begins with workers weighing out ingredients on electronic scales and then placing them in a machine for mixing. A worker then manually removes the mix from the machine and shapes it into loaves by hand, after which the bread is then placed into the oven for baking. All baked loaves are then inspected by OFL's quality inspector before they are packaged up and made ready for sale. Any loaves which fail the inspection are donated to a local food bank. The standard cost card for OFL's "Wheaty Special", one of its most popular loaves, is as follows: Processed flour Soy blend flour Yeast TOTAL 1800 grams 600 grams 40 grams White Flour Whole grain flour Yeast 2,440 Budgeted production of Wheaty Special was 1,000 units for the quarter, although actual production was only 950 units. The total actual quantities used and their actual costs were: Grams 1736 $7.20/9 $8.80/9 $20.00/g $36 608 40 2384 $Gram 7.10 8.70 24.00 39.80 Required: a) Calculate the total material mix variance and the total material yield variance for OFL for the last quarter. (b) Explain the importance of calculating material mix and yield variances

Answer rating: 100% (QA)

To calculate the total material mix variance and total material yield variance we need to compare the actual quantities and costs of materials used wi... View the full answer