Problem:
Super Ubar ltd has been successful in gaining a major contract to Ubar deliver meals to university students in Melbourne. These operations were previously managed by the chef legend, and the services were outsourced as a cost saving measure. Super Ubar tendered a low price, so it is very focused on cost control. The following standard prices have been established for some major food ingredients.
Item Standard price
Chicken Roast $15 per kg
Fish fillets $22 per kg
Chips $10 per kg
Mixed veggies $10 per kg
Super Ubar purchases the prepared food frozen in 10 kg. container and kitchen staff produce a range of standard meals. Two popular meals are the chicken dinner and the fish dinner. The standard quantities used in these two meals are as follows
Chicken dinner Fish dinner
Lamb roast 200 grams fish fillets 350 grams
Mixed veggies 250 grams Chips 300 grams
Chips 150 grams
During August, the company produced 500 chicken dinners and 800 fish dinners purchase and usages data for the major material ingredients during March follow
Items Purchase in March Used in
Quantity (kg) $per kg Production (kg)
Chicken roast 250 16.80 105
Fish fillets 170 25.20 300
Chips 300 10.00 320
Mixed veggies 300 10.80 120
Required
(i) Calculate the total direct material quality variance and price variances for March.
(ii) Prepare journal entries to record the purchase of material, use of Material and incurrence of variances in March.
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