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I got total kg used of 181512, then judt multiply by the relative proportion of each product in budgeted mix
std mix for me is calculated for each individual ingredient by taking each individual ingredient which goes into making one unit divided by total ingridents which go into making one unit multiplied by the total quanity of all each and sepreate ingrident used. then u deduct the figures from actual usage to give u mix variance in quanity then u multiply this by the std cost of each indiviudal ingrident.
Feroz
That is a very long winded explanation of mix variance.
Simply, 181,512 (actual mix of actual production) divide by 1.35 (standard mix) and then multiply each product by (from memory) 0.25, 0.6 & 0.5 respectively. The first two ingredients were adverse and the third favourable. However, third was cheapest and therefore overall adverse variance etc due to more expensive mix (think most people agree with this). Yield was very easy to get following on from that.Commentary will vary from person to person. An adverse mix would usually generate a favourable yield (a better “quality” product). However, this seemed to go the other way for customers and as soap is a product based on texture and smell the revised mix (although a better “quality”) did not improve the experience for the customer. Not sure how sales manager can be solely responsible for that? You can’t sell a soap that customers don’t want (and complain so aggressively about) no matter how much advertising you do. However, I think on balance I ended up blaming him anyway!!
Shadow price by definition the additional contribution generated from one additional unit of limiting factor so I guess it’s 56
@chris1975z said:
After he gets to see the paper on the ACCA website I would imagine!!Yes Chris, so I’ll put it different way, when will it be published?:) if you don’t know, I can make assumptions myself
Shadow price is 2.80 which means increase in one more unit would result in increase of contribution £2.80 so if 20 more unit available then 20 multiply by 2.80 which is increase contribution of 56
Geshi, i think you missed Cris’s comment. Your calculation is simple and wrong
Extra cost not needed I guess question was about increase in contribution. Shadow price was given which is increase in contribution of 1 more available unit. So if 20 more unit made available increase will be 56. Any way let’s wait for official answers. 🙂
Shadow price was 2.8 which means we can earn contribution of 2.8 per kg but after paying the price of $2 per kg which leaves us with $0.8.
$0.8×20=$16- Topics: 0
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How did you guys get round figures for your mix variance? If I remember correctly, I had some decimals like .33 and .67 for the standard mix. The yield was fine though, twas a whole number.
Absolutely agree with Hatif
I think people misunderstood shadow price for contribution and simply divided it
Yes some decimals if I can remember first 2 were adverse and the last was favourable.
I do not remember anything regarding decimals. If i had, then i definitely rounded up
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