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JC Ltd mixes three materials to produce a chemical SGR. The following extract is the cost card used in producing 100kg of chemical
A. 50kg @ $10 per kg
B. 40kg @ $5 per kg
C. 20kg @ $9 per kgActual
23,180 kg was produced using the following materialsA. 13,200kg
B. 7,600kg
C. 5,600kgWhat’s the total mix variance?
They got their answer as $9,200 (A)
My trouble is. Why adverse? Shouldn’t it be F since the way it was mixed was cheaper?
But it wasn’t cheaper!!!
They actually input a total of 26,400 kg.
From the cost card, for every 110kg input it should have been 50 kg of A, 40kg of B and 20kg of C.
So the correct mix would have been:
A: 50/110 x 26,400 = 12,000 kg
B: 40/110 x 26,400 = 9,600 kg
C: 20/110 x 26,400 = 4,800 kgHave you watched my free lectures on mix and yield variances?
And yes – I did watch those lectures. They’ve been extremely helpful!. Thanks again
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