Management Accountancy for Planning and Control

NESCOL
Ying and Yang plc manufacture two Phones for which the following are the
standard costs and selling prices:

Kg
Std Price
Ying Yang Per
Per KG
unit
£ £
Material C1 2.00 £0.20 10
Material C2 1.50 £0.75 2
Material S1 3.75 £1.25 3
Material S2 1.50 £1.50 1
Material cost 3.50 5.25
Labour cost 12.00 6.00
Fixed overhead 7.50 3.75
Total Cost 23.00 15.00

Selling Price 50.00 40.00

Monthly budget data

Production and sales 7,000 8,000
Labour rate per hour £12.00 £12.00

Actual results for April

Production (units) 7,200 7,600
Sales 7,200 7,600
Selling price £47.00 £41.00

Materials Used
C1 74,000 kg £0.18 per Kg
C2 15,000 kg £0.70 per Kg
S1 22,000 kg £1.30 per Kg
S2 7,000 kg £1.56 per Kg

Labour cost: 7,100 hours @ £12.20 per hour This includes overtime of 15
hours.
Labour hours includes non-productive time of 20 hours due to a machine
breakdown.
Fixed overhead cost £85,000
Management Accountancy for Planning and Control
NESCOL

Required

Calculate the following sub-variances, showing all workings:

 Sales margin: volume, mix and price.
 Contribution: volume, mix and price.
 Material: yield, mix and price.
 Labour: efficiency, idle time, overtime, and rate
 Fixed overheads: efficiency, capacity, and expenditure

Reconcile budgeted profit to actual profit, using either absorption or marginal

costing format.

Prepare a report which analyses the variances that have been calculated in
part (a) of your answer. You should state one valid reason for each calculated
variance. You should indicate possible instances of interrelationships
between the variances and provide possible reasons for, and solutions to, the
problems highlighted.