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Hi Sir
I have this question which I need your help on;
A company manufacturers a product by mixing three raw materials in a process. The following standards have been set per kg of input to the process.
Material: AB123, Standards quantity (kg) 0.40, Standard cost per kg $0.80, Total Standard cost: $0.32
Material: CD234, Standards quantity (kg) 0.25, Standard cost per kg $0.40, Total Standard cost: $0.10.
Material: EF456, Standards quantity (kg) 0.35, Standard cost per kg $0.80, Total Standard cost: $0.28.
The Standard yield for the process is 80%.
The total input to the process in June was 60000 kg and total output from the process was 48800 kg.
What is the material yield variance for June?
My Answer: The Actual Production is 48800 kg and the standard production for the actual input is 60000 kg x 0.80 = 48000, this mean they produced 48800 – 48000 = 800 kg x 0.70/0.80 = 700 favourable.
Is this correct?
It’s actually Product B that they need to produce more as there is no planned productions (units), it’s sales demand is 2400, make the used of extra 1000 kg, the difference 1400 x 1.60 = 2240, is that correct?
The question I would like to ask is what are the limiting factor for this question. Isn’t it we need to first check whether the supply of each product is adequate before working out the contribution per kg. I’m confuse of where I should be looking for limited factor.
Anyway I worked out the total material required for each product to find whether each product is adequate but they seemed to have exceeded the sales demand and that’s where I’m stuck with.
Hi Sir
I have this question which I have been trying to find a rule of calculating it, I don’t know whether I should rank it on as it is asking for the maximum amount that the company should pay if additional 1000 kg is added.
Product A has raw material per unit of 2.5 kg, contribution of $4.50, planned production in units: 720 and maximum sales demand of 1000
$4.80
Product B: raw mat. per unit: 3kg, contribution per unit: $4.80, no planned production in units, sales demand 2400.Product C: raw mat. of 1.5 kg, contribution per of unit of $2.95, planned production in unit: 2800 and maximum sales demand of 2800.
The correct answer is $2240.00
thank you sir,now I know how to tackle this type of question.What I have done is I divided the sales value to 100 then multiply it by contribution to sales ratios then fixed cost divide monthly breakeven sales revenue 400000/0.235=1702128.
Hi Sir
Could you please help with this question
A company sells three products, Product E has a contribution to to sales ratio of 25%,
Product F has a contribution to sales ratio of 20%, Product G has a contribution of sales ratio of 30%.Monthly fixed costs are $400000
If the ratio of the total sales value is a as follows:
E: 30%, F: 50%, G: 20%
What is the monthly breakeven sales revenue?
The given answer to this is 1702128.
Hello sir
I have figured the answers for Question 1 and question 2 why they are: 31500 and 49400. Please correct me if these are wrong.
For year 2
Quarter 1 = 10000 (3000 x 5) = 10000 + 15000 = 25000
Q2 = 10000 + (3000 x 6 ) = 28000
Q3 = 31000
Q4 34000The average between quarter 2 and quarter 3 is 29500 (28000 + 31000) 59000/2 = 29500 + 2,000 from the seasonal variation of = 31500.
Question 2
My answer:
Month 300 has a seasonal index value of 105.
a=50000 + (20 x 300)
a= 50000 + 6000
a= 56000
a = 5600 x 1.05 = 58800y= 20000 +(0.50 x 58800)
y = 20000 + (29400)
y = 49400According to my course provider, ‘These
answers do not provide explanation as to why a particular answer is or is not correct – students are encouraged to revisit their learning materials to determine the source of any incorrect attempts at answers.’The actual answer is 31500 for the question 1, To complete the question, it says that, What are the expected sales of Product A (in units) for year 2, quarter 2, after adjusting for seasonal variations using multiplicative model?
For question 2, the correct answer 49400
What have I done wrong with my answers in question 1 and question 2?
the answers are just in figures, no calculations and my answers are wrong. That’s why I’m going to contact the company where I purchased my study materials from.
Hi Sir
There is another question which I’m not sure about answer it but I have tried and I want to know if I’ve calculated it right.
The overhead costs of a company can be estimated using the formula:
y=$20000 + $0.50x
where y is the monthly cost and x represent the monthly activity level measure in unitsMonthly activity levels in units may be estimated using a time series model:
a= 50000 + 20b
where a represents the monthly activity level and b represents the month number.
in month 300, when the seasonal index is 105, what is the overhead cost expected to be?
My answer:
a=50000 + (20 x 300)
a= 50000 + 6000
a= 56000y= 20000 +(0.50 x 56000)
y= 20000 + 28000
y= 48000therefore the o/head cost expected to be: 48000 x 105 = $5,040,000
Is this correct?
Answer for this is 800F and these are my answers;
Actual total cost: 121,200 + 76000 = $197200
Standard cost for actual production: 60,000 x $11 ((2kg x $4)+ ((1kg+$3)) = $660,000
Therefore Total variance: $462800 (F)
Price Variance:
Actual purchase at actual cost
R: 40400 kg = $121200, S: 19000kg = $76000 = Total $197200Actual purchase at standard cost
R: 40400 kg x$4 = $161600, S: 19000kg x $3 = $57000 = Total $218600
Variance: 21400 (F)Material Mix:
Actual total usage at actual mix at std cost:
R: 40400 kg x$4 = $161600, S: 19000kg x $3 = $57000 = Total $218600At std mix at std cost
R: 2/3 x 59400 = 39600 x $4 = $158400, S: 1/3 x 59400 = $19800 x $3 = $59400 = Total $217800 Variance: 800(A)Yield variance
59400kg did yield $58800 (60000×0.98 (2% loss))
59400 should yield
(59400kg/3kg) $19800difference: $39000 x $11 = $429000 (F)
What have I done wrong?
Answer for this is 800F and these are my answers;
Actual total cost: 121,200 + 76000 = $197200
Standard cost for actual production: 60,000 x $11 ((2kg x $4)+ ((1kg+$3)) = $660,000
Therefore Total variance: $462800 (F)
Price Variance:
Actual purchase at actual cost
R: 40400 kg = $121200, S: 19000kg = $76000 = Total $197200Actual purchase at standard cost
R: 40400 kg x$4 = $161600, S: 19000kg x $3 = $57000 = Total $218600
Variance: 21400 (F)Material Mix:
Actual total usage at actual mix at std cost:
R: 40400 kg x$4 = $161600, S: 19000kg x $3 = $57000 = Total $218600At std mix at std cost
R: 2/3 x 59400 = 39600 x $4 = $158400, S: 1/3 x 59400 = $19800 x $3 = $59400 = Total $217800 Variance: 800(A)Yield variance
59400kg did yield $58800 (60000×0.98 (2% loss))
59400 should yield
(59400kg/3kg $how would calculate the total standard mix because I was just given a figure of 2:1?
I have watched your lecture and it was helpful but is the bit when it say two materials R and S in proportion 2:1. – 2/3 and 1/3? I didn’t know how to calculate the mix.
Hi Sir
I have this question, A company produced 5000 unit of Product B last month, the opening and closing inventory is 400 units and 900 units respectively. The selling price and production B were as follow; selling price £20, direct cost £6, variable production overhead cost £3.50, fixed production overhead cost £5.90, Gross Profit £4.60
I worked this – Sales 5,000 x £20 = 100,000, less: cost of sales – opening inventory 400 x £15.40 = £6160, Production 5000 x £15.40 = £77000,
closing inventory 900 x £15.40 = £13, 860My answer is £30,700 but the correct answer is £20,700. Could you please what I have done wrong.
Thank you in advance.
Hi Sir
If I’m confuse because the given answer is 35% and I divide to 80% = 0.4375 which is wrong. But Revenue is 80 – 32 as variable – 20 as fixed cost then this equal to 28/35 = .80, is that correct?
Hi Sir
I was just wondering how you worked out the total contribution. For example now I know the total Revenues for all products; Product A $10m, Product B $20m and Product C $12m, in total $42m but when I calculated it to the total ratios which is 50%, it gives $21m instead of $6.5m?
