Wilkin Fruit Drink Company planned to make 400,000 containers of apple juice. It expected to use two cups of frozen appleconcentrate to make each container of juice, thus using 800,000 cups (400,000 containers x 2 cups) of frozen concentrate.The standard price of one cup of apple concentrate is $0.25. Actually, Wilkin produced 404,000 containers of apple juice andpurchased and used 820,000 cups of concentrate at $0.26 per cup.Requireda. Complete the spreadsheet template to calculate price and usage variances.Spreadsheet Tips2. The cells that label the variances as F or U (favorable (F) or unfavorable (U)) are based on a function called IF. The IFfunction is needed because the variance can be either favorable or unfavorable. The formula must determine whether actualexpenditures exceed budgeted expenditures to determine whether the variance is unfavorable or favorable. As an example,the formula in cell D22 is =IF(B21>E21,"U","F"). The formula evaluates the expression B21>E21. If this expression is true (B21is greater than E21), the text U is inserted in cell D22. The IF function can also be used to place formulas or numbers in a cellbased on whether an expression is true or false. For example, the formula =IF(B21>E21,B21-E21,E21-B21) would calculatethe amount of the variance as a positive number regardless of which amount is larger.3. An easier way to make the variance a positive number regardless of whether it is favorable or unfavorable is to use theabsolute value function. The format of the formula in cells C22 and F22 would be =ABS(left number - right number).5. Explore the power of formulas by copying cells A13:H23 into the scratchpad area below. There you will be able to modifythe actual quantity, standard quantity, actual price, standard price, actual units, and standard per unit to see the resultingchanges in the variances.Actual QuantityXActual PriceXPrice VarianceTemplate for Price and Usage VariancesActual QuantityStandard PriceXUsage VarianceActual UnitsXStandard per unitStandard QuantityStandard Price400,000 800,000404,000 820,000X2$0.26$0.25

1. Material price variance: (The difference between the Standard Price and Actual Price for the…

Answered: o calculate price and usage variances.

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o calculate price and usage variances.

Cornerstones of Cost Management (Cornerstones Series)

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Chapter11: Strategic Cost Management

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Question

Wilkin Fruit Drink Company planned to make 400,000 containers of apple juice. It expected to use two cups of frozen apple
concentrate to make each container of juice, thus using 800,000 cups (400,000 containers x 2 cups) of frozen concentrate.
The standard price of one cup of apple concentrate is $0.25. Actually, Wilkin produced 404,000 containers of apple juice and
purchased and used 820,000 cups of concentrate at $0.26 per cup.
Required
a. Complete the spreadsheet template to calculate price and usage variances.
Spreadsheet Tips
2. The cells that label the variances as F or U (favorable (F) or unfavorable (U)) are based on a function called IF. The IF
function is needed because the variance can be either favorable or unfavorable. The formula must determine whether actual
expenditures exceed budgeted expenditures to determine whether the variance is unfavorable or favorable. As an example,
the formula in cell D22 is =IF(B21>E21,"U","F"). The formula evaluates the expression B21>E21. If this expression is true (B21
is greater than E21), the text U is inserted in cell D22. The IF function can also be used to place formulas or numbers in a cell
based on whether an expression is true or false. For example, the formula =IF(B21>E21,B21-E21,E21-B21) would calculate
the amount of the variance as a positive number regardless of which amount is larger.
3. An easier way to make the variance a positive number regardless of whether it is favorable or unfavorable is to use the
absolute value function. The format of the formula in cells C22 and F22 would be =ABS(left number - right number).
5. Explore the power of formulas by copying cells A13:H23 into the scratchpad area below. There you will be able to modify
the actual quantity, standard quantity, actual price, standard price, actual units, and standard per unit to see the resulting
changes in the variances.
Actual Quantity
X
Actual Price
X
Price Variance
Template for Price and Usage Variances
Actual Quantity
Standard Price
X
Usage Variance
Actual Units
X
Standard per unit
Standard Quantity
Standard Price
400,000 800,000
404,000 820,000
X
2
$0.26
$0.25

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