Week 6 Quiz 1 Copy
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Question 1 of 3
1. Question
HB Ltd produces perfume for which it uses three different types of liquid inputs. The following data is available regarding the inputs for the production of 80 litres of the perfume.
Input
Litres
Cost per litre
Total
A
40
€ 6.00
€ 240.00
B
30
€ 3.50
€ 105.00
C
30
€ 2.50
€ 75.00
Totals
100
€ 420
Note that the required input for 80 litres of perfume is 100 litres in materials. For the past month, the following production data is available:
Input
Litres
Total costs
A
45,000
€ 247,500
B
35,000
€ 147,000
C
20,000
€ 55,000
Total
100,000
€ 449,500
This input has resulted in 75,000 litres of perfume.
Calculate the direct materials price and efficiency variance for A, B and C, as well as at the process level
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Price Variance for A, B and C are respectively
Efficiency Variance for A, B and C are respectively
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Question 2 of 3
2. Question
Calculate the yield and mix variances for A, B and C.
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The yield variance for A, B and C are , and respectively
The mix variance for A, B and C are , , and respectively
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Question 3 of 3
3. Question
Explain how the results of question a and question b are related to each other. How should we interpret the yield and mix variance for input A, so how can we use it in managing the production process?
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The yield and mix variance explain where the efficiency variance of – €48,750 comes from: is this from less effecient use of the inputs, or is it also due to using the inputs in a different mix than expected?
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