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Management Accounting Variance Analysis

This document contains three problems related to flexible budgeting, variance analysis, and management control. Problem 1 provides budgeted and actual income statements for a table manufacturing company and requires calculation of flexible budget and sales volume variances. Problem 2 provides budgeted and actual direct material quantities and costs for a snack food company's new product and requires calculation of the budgeted and actual direct material costs and the total direct material variance. Problem 3 provides direct material and labor standards and actual usage for a clothing company and requires calculation of the price and efficiency variances for both direct materials and direct labor.

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Salsabila Hanifa G
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72 views2 pages

Management Accounting Variance Analysis

This document contains three problems related to flexible budgeting, variance analysis, and management control. Problem 1 provides budgeted and actual income statements for a table manufacturing company and requires calculation of flexible budget and sales volume variances. Problem 2 provides budgeted and actual direct material quantities and costs for a snack food company's new product and requires calculation of the budgeted and actual direct material costs and the total direct material variance. Problem 3 provides direct material and labor standards and actual usage for a clothing company and requires calculation of the price and efficiency variances for both direct materials and direct labor.

Uploaded by

Salsabila Hanifa G
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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TUTORIAL MANAGEMENT ACCOUNTING - WEEK 5

Ch 7: Flexible Budget, Direct-Cost Variances, and


Management Control

PROBLEM 1
Buffy’s Table Company manufactures tables for schools. The 2021 operating
budget is based on sales of 45,000 units at $55 per table. Operating income is
anticipated to be $395,000. Budgeted variable costs are $32 per unit, while fixed
costs total $640,000.

Actual income for 2021 was a surprising $666,000 on actual sales of 47,000 units
at $57 each. Actual variable costs were $30 per unit and fixed costs totaled
$603,000.

Required:
Prepare a variance analysis report with both flexible-budget and sales-volume
variances.

PROBLEM 2
Indofood is a manufacturing company in the snack industry. Earlier in 2019, the
management decided to introduce a new product called Kacang Premium, an
assortment of nuts in a pack, and it will be manufactured in the Karawang Barat
Plant. As its name suggests, Kacang Premium uses only the best ingredients and
is seasoned with a secret ingredient. Kacang Premium will be sold in packs of
150 grams, and made in batches. The Product Development Manager has
proposed that a batch of Kacang Premium (consisting of 200 packs) consists
of ingredients as below (budget): 1 = 200 pack @150gr

Ingredient Quantity per Price of input


Batch
Pistachio 110 packs Rp 50.000 per pack
Walnut 70 packs Rp 35.000 per pack
Macadamia 120 packs Rp 25.000 per pack
Secret Seasoning 20 packs Rp 70.000 per pack

During the second quarter of 2019, the Production Manager of PT Alam Sejahtera
reported that Karawang Barat Plant has manufactured 150 batches of Kacang
Premium, and it has been distributed in several upscale supermarkets in
Jabodetabek. The quantity of inputs and price of inputs are reported as below.
Ingredients Actual Quantity Actual Cost Actual Mix
Pistachio 16.640 packs Rp 856.960.000 32,5%
Walnut 11.520 packs Rp 402.048.000 22,5%
Macadamia 19.968 packs Rp 539.136.000 39%
Secret Seasoning 3.072 packs Rp 192.000.000 6%
Total Actual 51.200 packs Rp 1.990.144.000 100%

Required:
a. What is the budgeted cost of direct materials for the 30.000 packs?
b. Calculate the total direct materials efficiency variance.

HOMEWORK
Zarra manufactures shirts and other lines of clothing. A certain designed blouse
requires the following:

● Direct materials standard 2.25 square meters at $14.75


per square meters
● Direct manufacturing labor standard 1.25 hour at $20.00 per hour

During the third quarter, the company made 1,500 blouses and used 3,750 square
meters of fabric costing at a total direct materials cost of $42,500. Direct labor
totaled 2,000 hours for $47,150.

Required:
a. Compute the direct materials price variance and efficiency variance for the
quarter.
b. Compute the direct manufacturing labor price variance and efficiency
variance for the quarter.

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