WORKSHOP #4: VARIANCE ANALYSIS FOR BUNGA CLAY POTS

This exercise is practice of concepts seen during the last three sessions. Rules:
QUESTIONS TO BE ANSWERED 1. Work in teams of maximum three m
1. Proceed to fill all the yellow spaces in this sheet. Use as a guide the 2. Deliver your answers to my mail: rba
example provided in the previous session. 3. Time limit: Tuesday March 31, 8:30 a
2. Do a thorough analysis of variance, using as basis of judgment
what you know about BUNGA. Consult the accompanying
profile sheet (Word file). You must write the analysis, IN PROPPER,
STANDARD ENGLISH, in the profile sheet and return it together with
this completed excel sheet.
BUNGA CLAY POTS
In this exercise, Table 1 provides all the basic information about the
standard costs and unit price, assumed in order to construct the master budget.
The origin of this information is usually the recent experience with
providers and expert knowledge of their own processes.
Pay special attention to the fact that some come in kg, others in hr (hours) and still
others come expressed in combined units, such as kg/unit. Here, the word "unit"
refers to one unit of the finished product.
TABLE 1. INPUT DATA FOR THE MASTER BUDGET
Units 11,800
Price 1 unit $ 68.00
Raw material 1.8 kg/unit $ 2.40 /kg
Direct labor 2 hr/unit $ 7.50 /hr
Indirect manfct 1 unit $ 2.80 /unit
Overhead $ 265,000

TABLE 2. ACTUAL RESULTS

These values correspond to the actual outcome at period's end.
They are data as reported by the cost accountant.
The number of units actually sold is in red. And this is the
number of units that guide the construction of the flexible budget
Units 12,300
Hours direct labor 25,215
Price/unit $ 73
Raw material $ 57,712
Raw material/Kg $ 2.55
Direct labor $ 199,199
Indirect manfct $ 39,840
Overhead $ 289,000
. Work in teams of maximum three members.
. Deliver your answers to my mail: rbautist@uniandes.edu.co and to the monitor's
. Time limit: Tuesday March 31, 8:30 am.

TABLE 3. BUDGETARY ANAYSIS OF VARIANCE

All data in the 'Standard costs' column have been given per unit
of the finished product. Check the cells in each column, and gain understanding by reviewing how
each cell was computed, using the data in tables 1 and 2.
VARIANCE COMPARISON SHOULD BE MADE BETWEEN THE FLEXIBLE BUDGET AND THE ACTUAL RESULTS
Standard costs Master budget Flexible budget Actual results Variance
Units 11,800
Revenue $ 68.00 802,400
Raw material $ 4.32 (50,976)
Direct labor $ 15.00 (177,000)
Indirect manfct $ 2.80 (33,040)

Total contribution 541,384

Overhead (265,000)

Operating income 276,384

TUAL RESULTS
%Variance