Changa mire Ltd. manufactures a wide variety of products. No stocks of any products or raw materials are held. The following is a calculation of the total budgeted contribution from Product X for last month:
Sales (23,000 units of Product X) $2,323,000
Raw materials (Type A): 115,000 kg $805,000
Raw materials (Type B): 57,500 kg. $345,000
Direct labour: 69,000 hours $690,000
$1,840,000
Total budgeted contribution $483,000
The total actual contribution from Product X last month was somewhat less than the budgeted amount, as the following calculation shows
Sales (21,000 units of Product X) $2,205,000
Raw materials (Type A): 107,000 kg $802,500 .
Raw materials (Type B): 55,000 kg. $319,000
Direct labour: 61,000 hours $640,500
$1,762,000
Total actual contribution $443,000
Required:
a) Prepare a detailed variance analysis (including raw materials mix and yield variances) (15 marks)
b) Prepare a reconciliation statement which reconciles the total budgeted and actual contribution for last month in as much detail as is possible from the information provided (10 marks)
