- This topic has 8 replies, 4 voices, and was last updated 2 years ago by
.
- Posts
Hello Sir John Can you explain this to me.
Thanks
A company manufactures a fruit flavoured drink by mixing 2 liquids (A & J). The standard cost for
ten litres of the drink is shown below:
$
5 Litres of liquid A at $16 per litre 80
6 Litres of liquid J at $25 per litre 150
230
During August the company produced 4,800 litres of the drink. This was 200 litres below budgeted
production. The company purchased and used 2,200 litres of A for $18 per litre and 2,750 litres of
J for $21 per litre.
What is the material mix and material yield variance for August?For the mix variance you compare the actual usage (2,200 of A and 2750 of B) costed at standard cost, with the actual total at standard mix ((5/11 x 4,950) of A and (6/11 x 4,950) of B), again costed at standard mix.
For the yield variance you compare the actual total at standard mix costed at standard cost (the same as the second half of the previous paragraph), with the amount that should have been used at standard mix at standard cost. (From the cost card, they should use 11 litres for every 10 litres of output, so for output of 4,800 litres they should have use 11/10 x 4,800 = 5,280 litres, which should have been mixed (5/11 x 5280) of A and (6/11 x 5280) of B.
There are other ways of arriving at the same answers – it doesn’t matter which way you do it in the exam – but the way that I have written is the same way as I do it in our free lectures, and I think is the easiest (and most logical) way to learn it.
Hi Sir, my question is that I have never incorporated losses into material yield variance because the formula which I am using for (STD QTY ALLOWED) is = Actual units produced * std usage per unit (for each material).
Now when-ever I am using this, it is = 4800*5 = 24,000 & 4800*6 = 28,800. Sir how can I solve?Sir if I am not wrong I should go for 4800(Actual qty produced) * 5Litres(0.5) = 2400
Is this the correct pattern?The best way is the way that I show in my lectures and the way I explain in my previous reply.
I don’t understand your question-Does it relate to the above question?
If it does the answer is above it states:For the mix variance you compare the actual usage (2,200 of A and 2750 of B) costed at standard cost, with the actual total at standard mix ((5/11 x 4,950) of A and (6/11 x 4,950) of B), again costed at standard mix.
For the yield variance you compare the actual total at standard mix costed at standard cost (the same as the second half of the previous paragraph), with the amount that should have been used at standard mix at standard cost.
(From the cost card, they should use 11 litres for every 10 litres of output, so for output of 4,800 litres they should have use 11/10 x 4,800 = 5,280 litres, which should have been mixed (5/11 x 5280) of A and (6/11 x 5280) of B.
There are other ways of arriving at the same answers – it doesn’t matter which way you do it in the exam – but the way that I have written is the same way as John does it in his free lectures, and I think is the easiest (and most logical) way to learn it.
- You must be logged in to reply to this topic.