Answer to F5

Isn’t answer D correct? Neither Div1 nor Div2

Thank you very much, really!

bertos

December 2014 exam
Hi sir could you tell me if my answer is correct and worthy of marks for this question.
question 5.
part a) Material mix variance arise when there are a multiple number of ingredients which go into making a product and they are interchangeable to some extent. a favourable mix variance arises when a greater proportion of cheaper materials have gone into making a product and adverse when a greater proportion of expensive materials have gone into making a product. and if the mix is altered from the std input this effects the yield. a favourable yield arises if less inputs have gone into making output then expected and vice versa.
specfically to this situation a adverse material mix variance has arose becuase a greater proportion of expensive ingridents have gone into making the soaps specfically more lye and coconut oil which cost more per kg in comparison to shea butter leading to an overall adverse material mix variance. as a greater proportion of expensive matierals have been used this has led to less wastage and hence more yield from the materials used in making soaps. giving a favorable yield variance.
i also mentioned how the mix variance has further decreased from 5827 to 6000 from september to october. and how the yield has further increased from 9899 f to 1000 f.

part b)ii
i think the sales manager can be justified in his view that the change in material mix has caused a adverse sales volume variance due to the fact that less shea butter has been used into making the soaps which accounts for almost half of the input which goes into making the soaps this might of have had led to the quality of the product decreasing and hence customers being dissatisfied. there fore the production manager should be forced to change the mix of inputs which go into making the product or other wise the business faces the risk of losing customers which can have long term negative effects on the business.

Can you please tell me what you think of my answer and how many marks do you think it deserves if any, Thank you very much.

Thanks once again.

Sir when you say it should get the 50% needed do you mean for part b)i or part b ii).

Hi sir i am a bit confused and need your help to clarify this matter.
If you look at your solutions and ACCA’s for december 14 question q2 part b)
you and acca have actually taken total factory costs to be 306400 and divided this by 7200 hours to calculate cost per factory hour for tpar calculation.
But acca have written a note below their calculations in the offical f5 december 2014 M.S.

” Answers based on total salary costs were $80,000 were also equally acceptable since the wording of question was open to interpretation.”

does this mean that if you had taken 106400 (factory costs) +80000(salary costs) and divided by 2400 hours for one senior stylist and the figure you get for cost per factory hour is the right figure to use in the tpar calculation and would you be awarded full marks?

The reason why i am saying 2400 hours for one individual senior stylist is that if you only include one senior stylist in your total factory costs calculation you should also include 1 senior stylist for the bn hours or otherwise the calculation isnt on like to like basis.

Thanks again in advance for your help.