Either i have gone completly mad or AAT have this wrong on practice paper answers?..

topcat

Surely the usage variance answer is the wrong way around ? or i am an idiot im not sure anymore :w00t:

topcat

Also how can the usage variance being linked to price variance is it to do with bulk discounts?

SandyHood

Topcat Read the question The usage variances here are caused by the proportion of AA and BB used in the mix. 50:50 was the plan the actual mix was 46:54. So less AA was used than the standard and more BB was used than the standard. AND prices are outside the company's control.

topcat

SandyHood wrote: »

Topcat Read the question The usage variances here are caused by the proportion of AA and BB used in the mix. 50:50 was the plan the actual mix was 46:54. So less AA was used than the standard and more BB was used than the standard. AND prices are outside the company's control.

I thought the budget ratio is 45:55 where does 50:50 come from please? Think I'm might get a early night look at this in the morning again Thanks for your assistance sandy

SandyHood

Topcat
Can you see this line:
The two raw materials are planned to be used in equal proportions to make the cereal bar. Equal proportions means half AA and half BB.
Planned means budgeted

What the company nutritionist has set as the minimum percentage (of AA) is exactly that. Think about the product. It is a food item, sure you can reduce the content of AA, but if it goes below 45% the finished product isn't what it says it is.
Can you think of two ingredients that go into a finished product?
One class I took thought about gin and tonics, at some point if the gin % falls too low the customer will not accept that the product he/she is drinking is a gin and tonic.

A spritzer is typically white wine and soda and normally half and half. Would you accept one where some of the wine had been taken out and replaced with more soda? You might if it was a 49:51 mix, you might if it was 45:55 mix but you'd not feel you'd been given what you'd paid for if you only got 30% because 70% was soda. "Weights and measures" in the UK regulate the content of drinks.

Well your cereal bar is similarly regulated, go below 45% AA and it isn't the same bar it claims to be.

Please read the question: what the nutritionist says is exactly that - the view of a professional, but not an accountant's budget.
The plan is exactly that, the mix of ingredients the company planned to have. And the £ signs in a plan are the budget.

The usage variance is nothing to do with the price variance here.

topcat

SandyHood wrote: »

Topcat
Can you see this line:
The two raw materials are planned to be used in equal proportions to make the cereal bar. Equal proportions means half AA and half BB.
Planned means budgeted

What the company nutritionist has set as the minimum percentage (of AA) is exactly that. Think about the product. It is a food item, sure you can reduce the content of AA, but if it goes below 45% the finished product isn't what it says it is.
Can you think of two ingredients that go into a finished product?
One class I took thought about gin and tonics, at some point if the gin % falls too low the customer will not accept that the product he/she is drinking is a gin and tonic.

A spritzer is typically white wine and soda and normally half and half. Would you accept one where some of the wine had been taken out and replaced with more soda? You might if it was a 49:51 mix, you might if it was 45:55 mix but you'd not feel you'd been given what you'd paid for if you only got 30% because 70% was soda. "Weights and measures" in the UK regulate the content of drinks.

Well your cereal bar is similarly regulated, go below 45% AA and it isn't the same bar it claims to be.

Please read the question: what the nutritionist says is exactly that - the view of a professional, but not an accountant's budget.
The plan is exactly that, the mix of ingredients the company planned to have. And the £ signs in a plan are the budget.

The usage variance is nothing to do with the price variance here.

Thanks so much :001_smile::001_smile:

I was taking the nutritionist value as what the company would go from to make sure the product met the customers expectations.

Almost didnt post this , glad i did !